S$.$ Scheffler, the CFO of Berckman Enterprises, is trying to determine the firm$$s weighted

average cost of capital. He has assembled the information detailed in the bullet points below.

Based on this information, help Mr$.$ Scheffler estimate Berckman$$s WACC.

$$ There are $70,000$ bonds outstanding.

$$ Berckman has noncallable bonds that pay interest semiannually. These bonds have a

coupon rate of $10\%,11$ years to maturity, and sell for $$1,080.$

$$ There are $100,000$ preferred shares outstanding.

$$ Preferred stock sells for $$96$ per share, pays an annual dividend of $$7\mathrm{.}50,$ and has a

flotation cost of $8\%.$

$$ Berckman$$s common stock paid a $$4\mathrm{.}60$ dividend last year and there is an expected

constant growth rate of $4\%.$ The current stock price is $$60.$

$$ Scheffler knows that, to obtain new common equity financing, Berckman will need to

issue new common shares. The expected flotation cost is $10\%.$

$$ Berckman$$s tax rate is $30\%.$

$-1\mathrm{.}6$ million of shares outstanding