XYZ, Inc. is considered as being above average risk and so its market equity beta is 1.8. Currently, the default free rate on long term govt. securities is 4% and the market risk premium is 9%. Furthermore, XYZ has $3 million of interest bearing debt outstanding and the market value of equity is estimated at $2 million. Its income tax rate is 40% and its pre-tax interest rate on borrowed funds is 8%. Calculate XYZ's WACC.

Group of answer choices

14.3%

13.3%

12.3%

10.96%