Aviator Aircraft has a capital structure which consists of 60

percent debt and 40 percent common stock (60:40 D/E ratio). The

firm will be able to use retained earnings to fund the equity portion

of its capital budget. The company has annual coupon bonds

outstanding that currently sell for $930. These bonds have 15 years

to maturity and an annual coupon rate of 7.2%. The risk-free rate is

3 percent, the market risk premium is 7 percent, and Aviator's beta

is equal to 1.5. If the companys tax rate is 40 percent, what is the

companys weighted average cost of capital (WACC)?