2. (10 points) Predator Tech is in the process of expanding and raising new capital through an initial public offering of common equity. The company has a target capital structure consisting of a debt to value (wa) ratio of 30%. A current debt issue has a face value of $1,000 and annual coupon of 7.20% which is paid semi-annually. It has 20 years remaining to maturity and it currently sells for $1,025. Flotation costs of the new issue of stock are expected to be 7%, and using the pure play method with similar firms the stocks beta is estimated at 1.30 (adjusted for the leverage change). The investment bank believes the stock can sell at $15 per share. The company is expected to pay a dividend of $0.60 next year and it should grow at 8% per year indefinitely. If the tax rate is 25%, what is the weighted average cost of capital