Contare Truck Manufacturing Company (CTMC) s balance sheet (capital structure section) is given below as of today. Ms. Laura Prati, the finance manager of the company, has decided to use the book value approach to estimate companys WACC.

Items	Capital Structure
Long Term Debt (par value $1,000)	$ 54,660,000
Preferred Stock	10,025,000
Common Stock	99,940,000
Total	164,625,000

CTMC has semiannual bonds outstanding with 8 percent coupon. The bonds have a par value of $1,000, will mature in 7 years, and currently are selling for $865 per bond. The preferred stock of the company pays $2.50 preferred dividend per share per year and is currently trading at $21.65 per share at the Sassari Stock Exchange (SSE).

Ms. Prati has collected data, which indicate the risk-free rate to be 5 percent and expected return on market portfolio to be 12.30%. CTMC beta is estimated to be 1.25.

CTMC stocks are traded at $50.50 per share and the company recently paid dividend $4.00 per

share. Financial analysts believe CTMC will grow at a constant rate of 6% in future years. CTMCs current policy is to add a risk premium of 4.25% to the companys own before tax cost of debt, when bond-yield-plus-risk-premium approach is used to estimate companys own cost of equity. CTMC tax rate is 30 percent. What is your estimate of the CTMCs WACC. Explain your approach in writing and show your work step by step.