Lagoon Boat Sales Has 300,000 Shares of Common Stock Outstanding

Lagoon Boat Sales has 300,000 shares of common stock outstanding at a market price of $44 a share. Last month, the company paid an annual dividend in the amount of $1 per share. The dividend growth rate is 3.5 %. Lagoon also has 5,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 9.5 % coupon, pay interest annually, and mature in 7.5 years. The bonds are selling at 102 % of face value. The company's tax rate is 34 %. What is Lagoon's weighted average cost of capital?

A) 5.90 %
B) 6.67 %
C) 7.14 %
D) 7.38 %
E) 8.09 %