Our firm survives for the next $3$ years and then it is dissolved $($no residual value$).$ Each of these $3$ years, it earns before interest and taxes $$420,000($i$.$e$.,$ these are the only payoffs that shareholders will ever receive$)$ and has already depreciated its fixed assets. It draws $25\%$ of its financing from $3-$year bonds with face value $$1,000($each$)$ that pay an annual coupon of $$50$ and sell at par.

The firm has a beta of $1\mathrm{.}2$ and faces a corporate tax rate of $20\%.$ The risk free rate is $4\%$ and the expected market return is $14\%.$

What is the weighted$-$average cost of capital of the firm?

a$.$

$16\mathrm{.}6\%$

b$.$

$8\mathrm{.}5\%$

c$.$

$10\mathrm{.}5\%$

d$.$

$13\mathrm{.}25\%$

e$.$

$14\mathrm{.}5\%$

f$.$

$10\%$

g$.$

$13\%$

h$.$

$7\%$