Wellington Gas Has a Target Capital Structure of 50 Percent

Wellington Gas has a target capital structure of 50 percent common equity, 40 percent debt, and 10 percent preferred stock.The cost of retained earnings is 16 percent, and the cost of new equity (external) is 16.7 percent.Wellington can sell debentures that will have an after-tax cost of 8.3 percent and the after-tax cost of preferred stock will be 11.9 percent.What is the marginal cost of capital before and after the break point?

A) 12.51% and 12.86%
B) 11.18% and 11.53%
C) 14.23% and 14.68%
D) 12.51% and 11.53%