Question: Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid yearly dividend in the amount of $1.593 per share. The dividend growth rate is four percent. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7% coupon, pay interest yearly, & mature in 4.89 years. The bonds are selling at 99 percent of face value. The company's tax rate is 34%. Calculate Jake's weighted average cost of capital?
[A] 6.3%
[B] 6.9%
[C] 7.2%
[D] 5.3%
[E] 5.8%