Armadillo Mfg. Co. has a target capital structure of 50% debt and 50% equity. The company is planning to invest in a project that will necessitate raising new capital. New debt will be issued at a yield of 12% with a coupon rate of 10%. The equity will be provided by internally generated funds. No new outside equity will be issued. If the required rate of return on the firms stock is 15%, and its marginal tax rate is 40%, compute the firms cost of capital. Note that the component costs are before-tax costs.