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

Total assets	$7,460
Interest-bearing debt	$3,652
Average pre-tax borrowing cost	10.5%
Common equity:
Book value	$2,950
Market value	$13,685
Income tax rate	35%
Market equity beta	1.13

Assuming that riskless rate is 4.6% and the market premium is 7.3%, calculate Zonk's cost of equity capital:

a. 8.28%

b. 11.89%

c. 10.4%

d. 7.69%