Jack's Construction" Co. has 100,000 annual bonds outstanding. Each bond has a face value of $1,000, and the bonds are selling at 80% of face value. The bonds' cost of capital is 8.6 percent. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The risk-free rate is 4 percent, and the market return is 12 percent. Jack's tax rate is 34 percent. What is Jack's weighted average cost of capital?

11.18%

11.47%

10.06%

11.40%

10.43%