Company AZ has 100,000 shares of common stock outstanding at a price of $20 a share. The companys equity beta is 1.2. There are also $1.5 million bonds outstanding that has a coupon rate of 8 percent and yield of maturity of 10%. The bonds mature in 14 years, pay interest semiannually. What is the companys weighted average cost of capital? Assuming the Treasury Bills yield is 3% and the market return is 8%, corporate tax rate is 40%.

Group of answer choices

7.71%

9.77%

7.2%