Blues, Inc. is a multinational corporation based in the U.S. The company would like to estimate its weighted average cost of capital. Blues pays an average after-tax rate of 9 percent for its debt. Currently, T-bill rates are 3 percent. Return on the S&P 500 stock index (U.S. market return) is expected to be 12 percent and return on the world market portfolio is expected to be 14 percent. Furthermore, Blues stock has a domestic U.S. beta of 1.5 and a world beta of 0.8. Blues is in the 35 percent tax bracket. If Blues has a debt-to-equity ratio of 1.5,

What is its weighted average cost of capital assuming that the U.S. market is fully integrated?