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

Long term 30%

Preferred stock 5%

Common stock 65%

The firm can sell a 20-year, annual, 9 percent bond for $980. The bond`s flotation cost is 2 percent.

The firm has determined it can issue preferred stock at $65 per share par value. The stock will pay an $8.00 annual dividend. The cost of issuing and selling the stock is $3 per share.

The firm's common stock is currently selling for $40 per share. The dividend expected to be paid at the end of the coming year is $5.07. Its dividend payments have been growing at a constant rate for the last five years. Five years ago, the dividend was $3.45. 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 40 percent.

Calculate the firm's weighted average cost of capital assuming the firm .