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

Currentassets$ 38,000,000

Net plant, property, andequipment101,000,000

Totalassets$139,000,000

Liabilities and Equity

Accountspayable$ 10,000,000

Accruals9,000,000

Currentliabilities$ 19,000,000

Long-term debt (40,000 bonds, $1,000 parvalue)40,000,000

Totalliabilities$ 59,000,000

Common stock (10,000,000shares)30,000,000

Retainedearnings50,000,000

Total shareholders'equity80,000,000

Total liabilities and shareholders'equity$139,000,000

The stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semiannual payments are selling for $875.00.The beta is 1.25, 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 thefirm'sWACC?