Given the following information about company XYZ and the proposed investments, you are asked to determine the total investment based on cost of capital analysis. As part of your answer, provide an investment curve including the investment threshold

Proposed investments

Investment Name	Investment Capital ($) in millions	Investment Return (%)
A	12	12
B	15	8
C	8	15
D	10	13
E	18	11

Investment Plan

Debt 40%

Preferred Stocks 15%

Equity (Retained Earnings) 45%

Cost Data

Debt:

Yield = 12%

Tax rate = 40%

Preferred Stocks

Dividend = 15%

Preferred stock initial selling price = $100

Selling cost = $10

Equity

Dividend for first year = $4

Common stock initial selling price = $55

Selling cost = $5

Growth Rate = 7%

Q1)

What is the cost of debt (K_d)?

Group of answer choices

6.3%

7.2%

6.0%

8.5%