1. Padgett Corporation estimates that it can issue debt at a rate of r_d = 10%, and its tax rate is 40 percent. It can issue preferred stock that pays a constant $7.00 dividend per year at a price of $60 per share. Also, its common stock currently sells for $45 per share, the next expected dividend (D₁) is $2.25, and the dividend is expected to grow at a constant rate of 8 percent per year. The target capital structure consists of 55 percent common stock, 35 percent debt, and 10 percent preferred stock. What is Padgetts WACC?

a.10.64% b.10.42% c.7.09% d.6.02% e.11.82%