A firm has the following capital structure:

Debt: 6%, due in 15 years $9,000,000

Preferred shares: 5% dividend $2,000,000

Common shares: 750,000 outstanding $3,000,000

Retained earnings $2,500,000

$16,500,000

The current yields on similar risk bonds is 9%. The bonds pay interest annually. Flotation costs are $25 for each $1,000 bond.

The preferred shares are currently yielding 8%. Flotation costs for a new issue would be 5%.

The common shares are currently trading at $12 per share. Dividends have been growing at a steady rate of 2%, and this is expected to continue. The last dividend paid was $1.74/share. New shares would be issued at $10/share with flotation costs of 7%. Retained earnings are insufficient to support future activity.

The companys tax rate is 38%.

What is the weighted average cost of capital?