A firm has determined its optimal structure which is composed of the following sources and target market value proportions, long-term debt 65% and common stock equity 35%.

Debt: The firm can sell a 15-year, $1,000 par value, 8 percent bond for $1,050. A flotation cost of 2 percent of the face value would be required. Additionally, the firm has a marginal tax rate of 40 percent.

Common Stock: the firms common stock is currently selling for $92 per share. The firm expects to pay cash dividends of $7 per share next year. The stock must be underpriced by $6 per share, and the flotation costs are expected to amount to $4 per share. The dividends paid on the outstanding stock over the past 6 years (20102015) were as follows:

Year	Dividend
2015	3.99
2014	3.84
2013	3.70
2012	3.42
2011	3.12
2010	2.98

Calculate the weighted average cost of capital up to the point when retained earnings are exhausted?

(use the cost of retained earnings)