Elephant Company has 200,000 shares of common stock outstanding. It just paid a common dividend of $5 per share, and its common stock currently sells for $140 per share. Elephant Company has 25,000 shares of preferred stock outstanding. The preferred stock pays and annual dividend of $2.00 per share and currently sells for $30 per share. Elephant Company has 10,000 7% bonds outstanding. The bonds have a face value of $1,000 and mature in 10 years. The bonds currently sell for $865. Elephant Company has a Beta of .80, and its marginal tax rate is 40%. The risk free rate is 4%. The required return on the market is 12%. What is Elephant Company's Cost of Debt?

Question 48 options:

10.14%

9.11%

10.69%

11.28%

9.86%