CCC Inc.'s target capital structure is 55% debt, 15% preferred, and 30% common equity. The interest rate on new debt is 5.50%, the yield on the preferred is 6.5%, the cost of retained earnings is 7.25%, and the tax rate is 40%. The firm will not be issuing any new stock. What is the WACC? Do not round your intermediate calculations.

a. 7.88%

b. 6.35%

c. 6.61%

d. 4.97%

e. 5.95%