Udax Inc. recently hired you as a consultant to estimate the companys WACC. You have obtained the following information:

(1) The firm's noncallable bonds mature in 20 years, have an 10% annual coupon, a par value of $1,000, and are selling at par. (2) The companys tax rate is 25%. (3) The risk-free rate is 5%, the market risk premium is 7%, and the stocks beta is 1.5. (4) The target capital structure consists of 40% debt. The firm uses the CAPM to estimate the cost of equity, and it does not expect to issue any new common stock. What is its WACC?

A)12.3%

B) 11.6%

c) 10.1%

D)8%

e) 9.3%