Company A has a capital structure as shown below.

Calculate its weighted average cost of capital.

K Dollars

Retained Earnings 12.25% 3,575

Common Stock 11.50% 12,550

Preferred Stock 7.25% 2,500

Debt (before tax) 6.81% 6,375

25,000

a 6.25%

b 7.35%

c 8.27%

d 9.99%