I am looking for the warrants' COST OF CAPITAL. i am certain the answer is NOT 8.24%. please show steps to arrive at the correct answer. thank you!

Preissle Company wants to sell some 20 -year, annual interest, $1,000 par value bonds. Its stock sells for $42 per share, and each bond would have 75 warrants attached to it, each exercisable into one share of stock at an exercise price of $54. The warrants expire in 5 years. The firm's straight bonds yield 10%. Each warrant is expected to have a market value of $2.00. The company's stock is expected to grow at 7% indefinitely. What is the warrants' cost of capital? a. 7.83% b. 8.24% c. 8.65% d. 16.00% e. 19.66%