AMJ Berhad has a target capital structure of 50 percent debt and 50 percent equity. They are planning to invest in a project which will necessitate raising new capital. New debt will be issued at a before-tax yield of 12 percent with a coupon rate of 10 percent. The equity will be provided by internally generated funds. If the required rate of return on the firms stock is 15 percent and its marginal tax rate is 40 percent, compute the firms cost of capital.