Great Sound Music, Inc

Great Sound Music, Inc. has 20,000 shares of common stock outstanding at a market price of $26 a share. This stock was originally issued at $19 per share. The firm also has a bond issue outstanding
With a total face value of $300,000 which is selling for 97 percent of face value. The cost of equity
Is 10 percent while the after-tax cost of debt is 5 percent. The firm has a beta of 1.2 and a tax rate of
35 percent. What is Great Sound's weighted average cost of capital?

A) 7.07 percent
B) 7.58 percent
C) 7.83 percent
D) 8.16 percent
E) 8.21 percent