Emerson Electric Company desires to finance all projects with funds acquired according to their target capital structure of 35% debt and 65% equity. Emerson Electric can issue debt at a before-tax cost of 8.0% indefinitely, has $26,000,000 of retained earnings at a cost of 11.5%, and can issue new common stock at a cost of 13.5%. Emerson Electrics marginal tax rate is 32%. What is Emerson Electrics first weighted average cost of capital (where the cheapest sources of funds are used)?

a. 9.38%

b. 10.28%

c. 11.58%

d. 10.68%

e. 9.75%