Alpha Products Maintains a Capital Structure of 40 Percent Debt

Alpha Products maintains a capital structure of 40 percent debt and 60 percent common equity.To finance its capital budget for next year, the firm will sell $50 million of 11 percent debentures at par and finance the balance of its $125 million capital budget with retained earnings.Next year Alpha expects net income to grow 7 percent to $140 million, and dividends also are expected to increase 7 percent to $1.40 per share and to continue growing at that rate for the foreseeable future.The current market value of Alpha's stock is $30.If the firm has a marginal tax rate of 40 percent, what is its weighted cost of capital for the coming year?

A) 9.64%
B) 8.63%
C) 9.84%
D) 11.67%