Brutus Co. is a private company that has $10 million in debt outstanding. Brutus has 100 shares outstanding, and the last sale price for a share was $10,000. Brutus’ s credit rating would be similar to AA corporate bonds and their equity risk is similar to Buckeye Construction, a public firm with a beta of 1.75. The risk-free rate is 2% and the market risk premium is 5%. The following are the yields of corporate bonds based on each credit rating.

Bond rating

Yield

AAA

4%

AA

5%

A

6%

BBB

7%

BB

8%

B

9%

CCC

10%

Assuming a corporate tax rate of 20%, what is Brutus's WACC?

Group of answer choices
A. No enough information
B. 7.22%
C. 5.52%
D. 4.61%