Your company balance sheet show a total of non callable $45 million long term debt with a coupon rate of 7% and a yield of maturity of 6%. This debt currently has a market value of $50 million. Your company has 10 million shares of common stock and the book value of the common equity (common stock plus retained earnings) is $65 million. The current stock price is $22.50 per share, stockholders required return rs is 12%; and your firms tax rate is 40%. The CFO of our company thinks the WACC should be based on market value weights but the CEO thinks book weights are more appropriate. What is the difference between two WACCs?

a) 3.51%

b) 1.28%

c) 1.91%

d) 4.99%

e) 2.78%