A company has 10,000,000 shares outstanding with a current market price of $40 per

share. The company also has 400,000 bonds outstanding. These bonds have a maturity

of 15 years, pay interest semiannually, have a yield to maturity of 7%, and a coupon rate

of 6%. The company just paid a dividend of $3.00 per share and anticipates a future

growth rate of 5% annually indefinitely into the future. The tax rate for the company is

40%. What is the Weighted Average Cost of Capital for this firm? Suppose you

preferred using the CAPM approximation for the required return on equity. If the risk-

free rate is 5%, beta for the company is 1.5, and the expected market risk premium is 6%,

what would be a new estimate for the WACC?