Collins Group, a leading producer of custom automobile accessories, has hired you to estimate the firm's weighted average cost of capital. The balance sheet and some other information are provided below.

Total liabilities $ 40,000,000

Total shareholders' equity 80,000,000

Total liabilities and shareholders' equity $120,000,000

The stock is currently selling for $40.00 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with annual payments are selling for $875.00. The expected dividend is $1.25 and the dividend grows at a constant rate of 7%. The flotation cost of issuing new stock is 6%. The firm's tax rate is 40%.

What is the firms WACC if the firm needs to issue new common stocks to raise capital to maintain the current capital structure?