The current debt-to-equity ratio of Crimson Corporation is 2.5. The company has failed to give a comprehensive estimate of its target capital structure. The other financial details of the company are as follows: Book value of debt $250,000 Book value of equity $100,000 Market value of debt $350,000 Market value of equity $400,000 Current yield of debt 6% Yield to maturity of debt 7.50% Effective tax rate 30% Marginal tax rate 35% Equity risk premium 4.50% The risk premium for bearing additional risk associated with the company's stock compared to that of bonds is 3.5%. The company's weighted average cost of capital (WACC) is closest to: 6.63% 7.69%. 8.14%