The following data pertains to Zonk Corp., a manufacturer of ball bearings (dollar amounts in millions):

Total assets	$7460
Interest-bearing debt	$3652
Average pre-tax borrowing cost	10.5%
Common equity:
Book value	$2950
Market value	$13685
Income tax rate	35%
Market equity beta	1.13

Assume that Zonk is a potential leveraged buyout candidate. Assume that the buyer intends to put in place a capital structure that has 70 percent debt with a pretax borrowing cost of 14 percent and 30 percent common equity. Compute the weighted average cost of capital for Zonk based on the new capital structure.

a. 13.06%

b. 12.56%

c. 13.01%

d. 9.94%