Dobson Dairies has a capital structure which consists of 60% long-term debt and 40% common stock. The companys CFO has obtained the following information:

• The before-tax yield to maturity on the companys bonds is 8%.
• The companys common stock is expected to pay a $3.00 dividend at year end (D₁ = $3.00), and the dividend is expected to grow at a constant rate of 7% a year. The common stock currently sells for $60 a share.
• Assume the firm will be able to use retained earnings to fund the equity portion of its capital budget.
• The companys tax rate is 35%.

What is the companys weighted average cost of capital (WACC)?