Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow at 8% per year for the foreseeable future. The current stock price is $54. A $15 million bank line of credit is available with an interest rate of 9 percent. The firm's tax rate is 34%. What is the firms cost of capital if their capital structure consists of 60% equity and 40% bank loans?

11.98%

14.60%

12.58%

13.21%

15.20%