Assume that you have been hired as a consultant by CGT, a major producer

of chemicals and plastics, including plastic grocery bags, styrofoam

cups, and fertilizers, to estimate the firm's weighted average cost of

capital. The balance sheet and some other information are provided

below.

Assets

Current assets	$38,000,000
Net plant, property, and equipment	$101,000,000
Total assets	$139,000,000

Liabilities and Equity

Accounts payable	$10,000,000
Accruals	$9,000,000
Current liabilities	$19,000,000
Long-term debt (40,000 bonds, $1,000 par value)	$40,000,000
Total liabilities	$59,000,000
Common stock (10,000,000 shares)	$30,000,000
Retained earnings	$50,000,000
Total shareholders' equity	$80,000,000
Total liabilities and shareholders' equity	$139,000,000

The

stock is currently selling for $15.00 per share, and its noncallable

$1,000 par value, 20-year, 7.25% bonds with semiannual payments are

selling for $1,150.00. The beta is 1.35, the yield on a 6-month

Treasury bill is 3.50%, and the yield on a 20-year Treasury bond is

5.50%. The required return on the stock market is 11.50%, but the

market has had an average annual return of 14.50% during the past 5

years. The firm's tax rate is 40%. What is the best estimate of the firm's WACC?