Vandelay Industries has a target capital structure consisting of 40% debt, 5% preferred stock, and 55% common equity. Vandelay has 20-year, 11% semiannual coupon bonds that sell at their par value of $1,000. The component cost of preferred stock is 12.4%. Vandelay is a constant growth firm that recently paid a dividend of $2.05, sells for $27.00 per share, and has a growth rate of 7%. Flotation costs on new common stock are 10%, and the firm's marginal tax rate is 25%. What is Vandelay Industries WACC assuming they will have to use internal equity? Group of answer choices

13%

12.24% None of these choices

12.74%