Consider the following information for Watson Power Co.:

Debt: 4,500 7 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity,selling for 105 percent of par; the bonds make semiannual payments.

Common stock: 103,500 shares outstanding, selling for $61 per share; the beta is 1.11.

Preferred stock: 12,500 shares of 6 percent preferred stock outstanding, currently selling for $107 per share.

Market: 8.5 percent market risk premium and 5 percent risk-free rate.

Assume the company's tax rate is 33 percent. Find the WACC.

Multiple Choice

A. 10.47%

B. 10.05%

C. 9.55%

D. 9.65%

E. 9.83%