JG Enterprises has 50 million shares, trading at $4 a share; the cost of equity is 12%. It has debt with a market value of $ 100 million and a pre-tax cost of debt of 6%. Finally the company has $100 million in market value of preferred stock; the preferred shares are trading at $80 a share, with an annual preferred dividend of $6/share. If the marginal tax rate is 40%, estimate the cost of capital for the firm

a. 9.88%

b. 8.78%

c. 6.56%

d. 12.32%