Red Car Corp. has 625,000 shares of common stock and 28,750 5.25% annual coupon bonds outstanding. The bonds have a par value of $1,000 each, 33 years to maturity and sell for 121% of par. The common stock currently sells for $87, the next dividend will be $2.75, and dividends of the firm are expected to grow at 15% per year in perpetuity. If the firm's tax rate is 38%, what is the firm's weighted average cost of capital?

options: a) 12.06% b) 8.63% c) 13.27% d) 12.67% e) 10.86%