Question 6 ( 2.5 points) Consider the following scenario: Suppose a company has 100 million common shares outstanding, and each share sells for $20. We have estimated that the shares have a beta of 1.2, the risk-free rate is 3%, and the expected market return is 8%. The marginal tax rate for this company is 21%. The company also has $2 billion of bonds outstanding and the yield to maturity on these bonds is 5%. The company has a target capital structure of 60% equity and 40% debt. It does not and will not issue preferred stocks in the future. What is the cost of equity for this company? A) 9% B) 8% C) 7% D) 6%