Calculate the firm's WACC using retained earnings

Target capital structure: 50% debt, 10% preferred, 40% common equity

Preferred stock dividend: 9$

Preferred stock price: $125

Before-tax cost of debt: 8%

Required return on common stock: 11%

Marginal tax rate: 25%

A. 8.12%

B. 7.63%

C. 6.82%

D. 9.28%