The expected return on the market is 12.03%, the risk-free rate is 4.59%, and the tax rate is 24.00%. Semper Fun Sports has 300,000 common shares outstanding that are priced at $41.20 per share and have an expected return of 16.97% and an expected real return of 14.19%. Last year, Semper Fun Sports common stock had a return of 11.67%. The company also has 400,000 shares of preferred stock outstanding that are priced at $15.01 per share and have an expected return of 13.68% and an expected real return of 11.06%. Last year, Semper Fun Sports preferred stock had a return of 8.11%. Finally, the company has 10,000 bonds outstanding with a coupon rate of 9.02%, yield-to-maturity of 4.58%, current yield of 8.45%, face value of $1,000.00, and price of $1,280.00. What is the weighted average cost of capital for Semper Fun Sports?
10.80% (plus or minus 0.02 percent)
10.40% (plus or minus 0.02 percent)
12.00% (plus or minus 0.02 percent)
11.25% (plus or minus 0.02 percent)
None of the above is within .02 percentage points of the correct answer
