An investor is considering purchasing a 4-unit multifamily but is limited on capital.

The individual has \($125\),000 and the purchase price is \($625\),000. The individual has a commitment from a local lender to fund the difference (assume no transaction costs and/or inefficiencies). The lender will charge 6.25% interest and the investor can earn 11.00% in the equity market on invested capital. Last year the investor paid 26.5% in federal taxes. What is the investor’s Weighted Average Cost of Capital that should be used to discount the forecasted cash flows for this project?

a 5.56%

b 5.73%

c 6.02%

d 5.88%