Question $1$

$15$ pts

Ch$.12$: WACC using CAPM

An office supply company has a target capital structure of $75$ percent common stock, $10$ percent preferred stock, and $15$ percent debt. The company has a beta of $1\mathrm{.}2,$ the cost of preferred stock is $6$ percent, and the pretax cost of debt is $5$ percent. Currently, the risk$-$free rate is $3\%$ and the market risk premium is $6\%.$ The relevant tax rate is $20$ percent. What is the company's weighted average cost of capital $($WACC$)?$

$\backslash$table$[[\%$ in Common Stock,$75\%$