A company has determined that its optimal capital structure consists of 40% debt and 60% equity. Assume the firm will not have enough retained earnings to fund the equity portion of its capital budget. Also, assume the firm accounts for floating costs by adjusting the cost of capital. Given the following information, calculate the firms weighted average cost of capital ( WACC ).

r _d = 8%

Net income = $40,000

Dividend ratio = 50%

Tax rate = 40%

P ₀ = $25

Growth = 0%

Floatation cost on common equity = 15%