Mikey s Machines is trying to decide whether or not to invest in a new line of business renting equipment and wants to calculate their WACC. Assume that their capital structure consists of 35% common stock, 10% preferred stock, and 55% debt. Further, analysts predict that their future cost of debt will be 6% and their cost of preferred stock is 10%. We also know that the current price of common stock is $26 and that the common stock is expected to pay a $2.00 dividend and then continue to grow at a rate of 5%. The firm s tax rate is 35%. What is this firm s WACC?

A. 7.59%

B. 8.74%

C. 4.90%

D. 7.72%

E. None of these