Exactly five years ago, Lee Corp. issued bonds with an original maturity of 25 years. These bonds pay interest semi-annually, and have a fixed coupon rate of 6.5%. These bonds are currently trading for $1070 for each $1000 of face value. The company faces a marginal tax rate of 25%. Lee Corp. had common stock earnings per share (EPS) of $6 for the year just ended. Its retention ratio is consistent at 50%. Analysts expect that the companys earnings and per-share dividends will grow at a constant rate of 4.25% for the foreseeable future. Each share of Lees common stock is currently trading for $65.80. Lees management has surveyed institutional investors and ascertained that they would require a premium of 4% over the firms bond yield in order to be induced to invest in the companys common stock. Lee Corp. also has some perpetual preferred stock outstanding that pay a fixed (annual) dividend of $9 per share. Each of these shares has a par value of $75, and is currently trading for $108. Lees management intends to continue raising 40% of its funds from debt, 10% from preferred equity, and the remainder from common equity.

Estimate Lees weighted average cost of capital (WACC).

*Please solve using an explanation within an Excel file. Thank you!