A firm has the following capital structure:

1. Bonds with market value of $4,500,000

2. Preferred Stock with a market value of $800,000

3. Common stock, of which 200,000 shares is outstanding. Presently, each common stock is selling at $67.50 per share

The preferred stock price per share is $75 and pays a $5 dividend. Common stock shares sell for $67.50 and pay a $2 dividend. Dividends for common stock are expected to grow by 1%. Bond price is $950, and the bond coupon rate is 7.0%. The bonds mature in 6 years.

The firms tax rate is 38%. The company has $3,000,000 in sales, and expenses of $2,300,000. The initial investment of $5,000,000 will be depreciated straight-line over 10 years. The project is expected to last 10 years.

1. What is the firms Weighted Average Cost of Capital (WACC)? (round to the nearest 4 decimal places)