The company, Theta, is expected to have an operating cash flow of $1 million next year. It issued 1 million bonds before and the bond is currently selling at a price $900 (par value $1000) per unit. The bond is expected to retire in 10 years with a coupon rate of 12%. The coupon is paid semiannually. Common shares of Theta is selling at $100 per share and there are 11 million shares outstanding. The return on unlevered equity is 20% and the tax rate is 40%. What is the firm's cost of capital?

A 12.35%

B. 20.16%

C.16.40%

D. 18.90%