Pfd Company has debt with a yield to maturity of 7%, a cost of equity of 13% and a cost of preference stock of 9%.

Pfd Company has debt with a yield to maturity of 7%, a cost of equity of 13% and a cost of preference stock of 9%. The market values of its debt, preference stock and equity are $13 million, $3 million and $15 million, respectively, and its tax rate is 35%. What is this firm's WACC?  

a.The WACC (adjusted for tax) is 8.42%.

b.The WACC (adjusted for tax) is 9.79%.