The Wildhorse Company has an after-tax cost of debt capital of 3 percent, a cost of preferred stock of 7 percent, a cost of equity capital of 12 percent, and a weighted average cost of capital of 6 percent. Wildhorse intends to maintain its current capital structure as it raises additional capital. In making its capital-budgeting decisions for the average-risk project, the relevant cost of capital is: A. 7 percent

B. 6 percent

C. 12 percent

D. 3 percent