Cleopatra's Resorts Incorporated has a current capital structure that is 60 percent equity, 30 percent debt, and 10 percent preferred stock. This is considered optimal. Cleopatra's is considering a $100 million capital budgeting project. During the coming year Cleopatra's expects to have $20 million of retained earnings available to finance this capital budgeting project. The marginal tax rate is 40 percent.

Cleopatra's can sell $1,000 par value bonds with a 9 percent coupon rate to net $980 after issuance costs. The bonds mature in 15 years, and coupon payments are paid annually.

Preferred stock can be sold at a $50 price with a $5 annual dividend. Flotation or issuance costs will be $3 per preferred share.

Common stock can be sold at a $25 price. The common dividend is expected to be $3.00 next year. Dividends have been growing at an annual compound rate of 4 percent annually and are expected to continue growing at that rate into the foreseeable future. Flotation or issuance costs will be $4 per common share.

Calculate Cleopatra's weighted average cost of capital that is appropriate to use in evaluating this capital budgeting project. What is the weighted average cost of capital?