Your firm is planning to invest in a new electrostatic power generation system. Electrostat Inc is a firm that specializes in this business. Electrostat has a stock price of $28 per share with 22 million shares outstanding. Electrostat's equity beta is 1.25. It also has $240 million in debt outstanding with a debt beta of 0.1. If the risk-free rate is 2%, and the market risk premium is 7%, then your estimate of your cost of capital for electrostatic power generators is closest to:

Group of answer choices

6.54%.

7.16%.

8.49%.

10.32%.