Debt: 60,000 zero coupon bonds outstanding, 25 years to maturity, selling for 98 percent of par; the bonds have a $1,000 par value each. Common stock: 1,350,000 shares outstanding, selling for $97 per share; the beta is 1.15. Preferred stock: 90,000 shares of 5.7 percent preferred stock outstanding, par value of $100, selling for $95 per share. Market: 7 percent expected market risk premium; 3.8 percent risk-free rate. DEI's tax rate is 25 percent. The project requires $825,000 in initial net work- ing capital investment to get operational.

WACC?