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$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ FM Foods, Inc.
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Facts and assumptions as of Dec. 31, 2011
$\begin{array}{lr}\hline \text { Yield to maturity on long-term government bonds } & 4.4 \% \\\text { Yield to maturity on company long-term bonds } & 6.3 \% \\\text { Coupon rate on company long-term bonds } & 7.0 \% \\\text { Historical excess return on common stocks } & 6.5 \% \\\text { Company equity beta } & 1.20 \\\text { Stock price } & \$ 40.00 \\\text { Number of shares outstanding (millions) } & 240 \\\text { Book value of equity (millions) } & \$ 5,240 \\\text { Book value of interest-bearing debt (millions) } & \$ 1,250 \\\text { Tax rate } & 35.0 \% \\\hline\end{array}$
-Please refer to the information for FM Foods above.Estimate FM's weighted-average cost of capital.

A) 6.46%
B) 6.58%
C) 11.27%
D) 11.32%
E) 11.52%