Bay Beach Industries wants to maintain their capital structure of $40\%$ debt and $60\%$ equity. The firm's tax rate is $34\%.$ The firm can issue the following securities to finance the investments:

Bonds: Mortgage bonds can be issued at a pre$-$tax cost of $9$ percent. Debentures can be issued at a pre$-$tax cost of $10\mathrm{.}5$ percent.

Common Equity: Some retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $$46.$ Flotation costs will be $$3$ per share. The recent common stock dividend was $$3\mathrm{.}60.$ Dividends are expected to grow at $6\%$ in the future.

What is the cost of capital using debentures and external equity?

$11\mathrm{.}30\%$

$10\mathrm{.}96\%$

$11\mathrm{.}35\%$

$11\mathrm{.}69\%$

$13\mathrm{.}12\%$

please help me understand