You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred stock, and 45% common equity. The cost of debt is 8.00%, cost of preferred stock is 7%, and cost of common equity is 12.75%. The tax rate is 40%. What is its WACC? 1) 8.71% 2) 8.85% 3) 8.15% 4) 8.45% 5) 9.14%