The market value of Fords' equity, preferred stock and debt are

$7

billion,

$3

billion, and

$12

billion, respectively. Ford has a beta of

1.7,

the market risk premium is

7%,

and the risk-free rate of interest is

4%.

Ford's preferred stock pays a dividend of

$3.50

each year and trades at a price of

$30

per share. Ford's debt trades with a yield to maturity of

9.5%.

What is Ford's weighted average cost of capital if its tax rate is

25%?

A.

12.64%

B.

11.59%

C.

11.06%

D.

10.54%