Consider the following information for Watson Power Co.:

Debt: 5,500 6.5 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 103 percent of par; the bonds make semiannual payments.

Common stock: 126,500 shares outstanding, selling for $55 per share; the beta is 1.08.

Preferred stock: 17,000 shares of 5.5 percent preferred stock outstanding, currently selling for $104 per share.

Market: 8.5 percent market risk premium and 5 percent risk-free rate.

Assume the company's tax rate is 32 percent.

Find the WACC.