Consider a firm having a target capital structure consisting of 60% long-term debt, 10% preferred stock, and 30% common stock.

Find the weighted average cost of capital, assuming that the costs of the various sources of funding are as follows: the after-tax cost of long-term debt is 4%, the cost of preferred stock is 12%, and the cost of common stock is 16%.

Group of answer choices

7.00%

7.20%

8.00%

8.40%

10.67%