You were hired as a consultant to Keys Company, and you were provided with the following data: Target capital structure is 40% debt, 10% preferred, and 50% common equity. The after tax cost of debt is 4.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The firm will not be issuing any new stock. What is the firms WACC?

1. 7.55%
2. 7.73%
3. 7.94%
4. 8.10%

I would like this answered in long form with formulas going step by step. PLEASE DO NOT ANSWER WITH EXCEL.