ABC Inc. currently has the following information. (1) The firm's non-callable bonds mature in 10 years, have an 5.00% semi-annual coupon, a par value of $1,000, and a market price of $985.00. (2) The companys tax rate is 35%. (3) The risk-free rate is 3.0%, the market return is 10.50%, and the stocks beta is 1.30. (4) The target capital structure has the debt-to-equity ratio of 2.5. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?

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