Patton Paints Corporation has a target capital structure of 40 percent debt and 60 percent common equity, with no preferred stock. Its before-tax cost of debt is 11 percent , and its marginal tax rate is 40 percent. The current stock price is P0 =$25 The last dividend was D0 = $2.50, and it is expected to grow at a constant rate of 6 percent. What is its WACC?

1)13.4%

2)12.2%

3)11.8%

4)12.6%