The Cullumber Company has an after-tax cost of debt capital of 4 percent, a cost of preferred stock of 7 percent, a cost of equity capital of 10 percent, and a weighted average cost of capital of 6 percent. Cullumber intends to maintain its current capital structure as it raises additional capital. In making its capital-budgeting decisions for the average-risk project, the relevant cost of capital is:

A) 6%

B) 7%

C) 10%

D) 4%