Firm ABCs projected cash flows are as follows

Year	1	2	3	4 and 4+
CF	3,500	6,000	10,000	Grow at g = 1% forever

We can choose one of the following three capital structure plans:

	Debt	Equity	Credit Rating
Plan A	30%	70%	AAA
Plan B	40%	60%	AA
Plan C	70%	30%	A

The credit spread is as follows

Credit Rating	Credit Spread
AAA	0.50%
AA	1%
A	3%

The firms unlevered beta is 1.2, tax rate is 21%, and market return is 13%.

The 10-year Treasury bond with par value $100, annual coupon rate 3.125%, 10-year to maturity, is selling at $85.

What is the lowest possible WACC

Hint: use the treasury bond to calculate the risk-free rate.

the cost of debt = risk-free rate + credit spread

Group of answer choices

a. 19.27%

b. 11.13%

c. 13.68%

d. 8.57% (this one is wrong)