Use the following information:

Debt: $$78,000,000$ book value outstanding. The debt is trading at $93\%$ of book value. The yield to maturity is $8\%.$

Equity: $2,800,000$ shares selling at $$45$ per share. Assume the expected rate of return on Federated$$s stock is $17\%.$

Taxes: Federated$$s marginal tax rate is Tc$=0\mathrm{.}21$

$.$

Suppose Federated Junkyards decides to move to a more conservative debt policy. A year later, its debt ratio is down to $14\mathrm{.}25\%($D$/$V $=0\mathrm{.}1425).$ The pre$-$tax cost of debt has dropped to $7\mathrm{.}6\%.$ The company$$s business risk, opportunity cost of capital, and tax rate have not changed.

Use the three$-$step procedure to calculate Federated$$s WACC under these new assumptions. WACC$=?$