Instructions to solve the problem:

You are required to use a financial calculator or spreadsheet (Excel) to solve the problem related to the cost of capital.

You are required to show the following 3 steps for the problem.

1. Describe and interpret the assumptions related to the problem.
2. Apply the appropriate mathematical model to solve the problem.
3. Calculate the correct solution to the problem. Submit all answers as percentages and round to two decimal places.

Problem:

Fisheye Inc. is investing in a new project costing $24 million. It will raise $8 million in bonds, $6 million in preferred stock, and $10 million in retained earnings. If the after-tax cost of debt is 6%, cost of preferred stock is 12%, the cost of retained earnings is 16%, and the cost of new common stock is 20%, what is the WACC?

Thank you,