1. Calculate the weighted average cost of capital for a company given the following:

Dividend expected in year one: $1.62/share

Expected dividend growth rate in perpetuity: 3.5%/year

Current market price of companys common stock: $13.00/share

Companys debt is in the form of 7-year, 11% (annual) bonds with a face value of $1,000 per bond. Current market value of bonds is $1,058.81/bond

Number of common stocks outstanding: 21,000,000

Market value of debt and equity combined: $420 million

The companys marginal tax rate: 35%