Gul Corp. considers the following capital structure optimal: 40% debt; 50% equity; and 10% preferred stock. Guls stock currently sells for $50 per share. Guls beta is 1.8. The risk-free rate is 9 percent and the expected market return is 13 percent. Guls bond currently sells in the market for $1150. The bond carries an annual coupon payment of 12 % of the face value which is paid in two semiannual payments. The bond will mature in 15 years and its face value is $1000. The bond's annual yield to maturiy is 10.04%. The firms marginal tax rate is 40 percent. The Guls required return on the preferred stock is 13%. Find the firms overall cost of capital (WACC).

	1.	11.809%
	2.	16.213%
	3.	13.416%
	4.	8.109%