Jack's Construction Co. has 70,000 bonds outstanding that are selling at par value. The bonds yield 7 percent. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1 and sells for $30 a share. The U.S. Treasury bill is yielding 3 percent and the market risk premium is 6 percent. Jack's tax rate is 34 percent. What is Jack's weighted average cost of capital?

7.39 percent

8.38 percent

4.40 percent

4.11 percent

7.66 percent