Suppose that in the coming year, you expect Exxon-Mobil stick to have a volatility of 42% and a beta of 0.9, and Merck's stock to have a volatility of 24% and a beta of 1.1. The risk free interest rate is 4% and the market's expected return is 12%. The cost of capital for a project with the same beta as Exxon Mobil's stock is closest to:

11.6%

11.2%

7.6%

12.8%