The market value of debt is $325 million, the market value of preferred stock is $185 million, and the total market value of the firm is $925 million. The cost of equity is 17%, the pretax cost of debt is 10%, the cost of preferred stock is 4.5%, and the tax rate is 35%. What is the WACC?

1. 9.01%

2. 12.18%

3. 10.81%

4. 14.17%

5. 10.70%