You have been assigned to calculate the Weighted-Average-Cost-of-Capital for your firm, which has two sources of long-term capital. The companys marginal tax rate is 25%.

First, there are 207,500 shares of common stock, which are currently selling for $39.93. You estimate that the firms Beta is 0.75. The current return on short-term T-Bill is 2.25%, and you expect the long-term return on the stock market to be about 9.75%.

Second, there is an issue of 4,500 coupon bonds with a face value of $1,000, which pays 5.10% (annual) coupons, and mature in fourteen years. These bonds are currently trading for $950.

What is the firms Weighted-Average-Cost-of-Capital?

Group of answer choices

6.63%

7.92%

5.99%

6.10%