4. (40 pts) You just started your new internship at Zac, Zach & Zack's Beanie Boos Distributors, a small-cap publicly-traded company that wholesale distributes cute, large-eyed stuffed animals (their favorite being Waddles the pig). Your supervisor has just informed you that your first task will be to calculate the weighted average cost of capital (WACC) for ZZ&Z, who is in the 25% marginal tax bracket. The following general and company specific information has been provided to you: ZZ&Z currently has semiannual coupon, $1,000 par value bonds with a 18-year maturity that pay $118 total annually in interest (paid semiannually). The current market price $940.50 for each bond. Zz&z's common stock is currently selling for $34.50 per share and paid a common stock dividend of $2.70 earlier this year. Their beta is 1.3. Also, you have found that U.S. 10-year treasuries are currently showing a 2.2% yield, and the S&P 500 has been averaging about 11% this year. The book value capital structure of Zz&z is 30% long-term debt and 70% common stock. The current market value capital structure of Zz&Z is 40% long-term debt and 60% common stock. The target capital structure of Zz&Z is 45% long-term debt and 55% common stock. Given the above information, determine the weighted average cost of capital (WACC) for ZZ&Z Distributors