S-Squid 50 has 5 million shares outstanding, trading at $17.5/share. The company has one convertible bond, with a face value of $130 million, a 12year maturity and a coupon rate of 5%; the bond has a market value of $156 million. If the current cost of equity for the firm is 8.75% and the pretax cost of debt is 4.45%, what is the cost of capital for the firm? (The marginal tax rate is 35%)

a)	8.94%
b)	5.47%
c)	7.15%
d)	6.18%
e)	6.34%