A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions:

Debt: The firm can sell a 10-year, $1,000 par value, with interest coupon $ 75 for a discount bond $960 paid semiannually. A flotation cost of 1 percent of the face value would be required in addition to the discount of $40. (Use the approximation approach) Preferred Stock: The firm has determined it can issue preferred stock at $85 per share par value. The stock will pay $12.00 annual dividend. The cost for issuing preferred stock is $2.00 Common Stock: The firm's common stock is currently selling for $50 per share. The dividend expected to be paid at the end of the coming year is $4. Its dividend payments have been growing at a constant rate for the last five years. Five years ago, the dividend was $2.5. It is expected that to sell, a new common stock issue must be underpriced at $1 per share and the firm must pay $1 per share in flotation costs. Additionally, the firm's marginal tax rate is 25 percent. Calculate the firm's weighted average cost of capital assuming the firm has exhausted all retained earnings!