You are trying to estimate the cost of capital for Spyriakos Shipping, and have collected the following information:

- The firm has $ 800 million in interest-bearing debt on its books, on which it pays $ 45 million in annual interest expenses. The weighted average maturity of the debt is 5 years.

- The bond rating for the firm is A-, and the default spread over the T.Bond rate is 2.5%.

- There are 250 million shares outstanding, trading at $ 12 a share.

- The unlevered beta for other shipping firms is 0.90.

- The ten-year T.Bond rate is 5.2% and the market risk premium is 5.17%.

- The marginal tax rate is 40%

Estimate WACC.

a.

10.58%

b.

18.69%

c.

7.45%

d.

9.37%