AllCity, Inc., is financed

40%

with debt,

8%

with preferred stock, and

52%

with common stock. Its pretax cost of debt is

6.4%,

its preferred stock pays an annual dividend of

$2.52

and is priced at

$26.

It has an equity beta of

1.13.

Assume the risk-free rate is

2%,

the market risk premium is

6.6%

and AllCity's tax rate is

25%.

What is its after-tax WACC?

Note: Assume that the firm will always be able to utilize its full interest tax shield.

Question content area bottom

Part 1

The WACC is

enter your response here%.

(Round to two decimal places.)