A company is looking to invest in new machinery. The current financing is 40% debt, 40% common stock, and 20% preferred stock. The company anticipates the new debt issue will consist of 15-year $1,000 face-value bonds that will be priced at par. The bonds will pay an annual coupon of $75. Flotation costs for this new bond issue will be $15 per bond. The company has recently paid a dividend of $3.50 and is expecting to increase the dividend by 5% per year, indefinitely. The current share price for the company’s common stock is $32. The company also plans to issue preferred stock that will pay a dividend per share of $7 per year in perpetuity. The market price of the preferred stock will be $60. The flotation costs of both the common stock issue and preferred stock issue will be $2.50 per share. If the company’s marginal tax rate is 39%, then what is the Weighted Average Cost of Capital for this company?

A) 13.84%

B) 9.95%

C) 12.55%

D) 11.29%