Layman Co. has the following target capital structure: 30% Debt 20% Preferred Stock 50% Common Stock The current average coupon on the company's bonds with a 5 year maturity is 10% with a yield to maturity of 10.5%. The marginal tax rate is 35%. The company can issue perpetual preferred stock with a constant dividend of $3.50 per share at a price of $40. The company's common stock's beta is 1.40. The risk free rate of return is 3.0%. The market risk premium is 6.5%. What is the after-tax cost of preferred stock? Select one: 10.00% O a. O b. 8.75% O c. 6.80% O d. 12.10%