Following is information about Sleek Pleats (SP) Corporation. The company has no preferred stock.

Type ofProportion of the

Type of CapitalAfter-Tax CostCapitalCapital Structure

Debt, rdT7.0%Debt30.0%

Common equityEquity70.0

Retained earnings, rs14.0

New issue, re16.0

The firm expects to retain $210,000 in earnings this year to invest in capital budgeting projects. If the SP's capital budget is expected to equal $290,000, what required rate of return, or marginal cost of capital, should be used when evaluating capital budgeting projects?

11.9%

13.3%

10.5%

11.5%

12.3%