Falcons Footwear has 12 million shares of common stock selling for $60/share with a required return of 9.2 percent. They have 2 million shares of preferred stock selling for $85/share with a required return of 8.82 percent. Finally, Falcons Footwear has $100 million in bonds with a return of 7 percent. The firms marginal tax rate is 40%.

Required:

Compute the weighted average cost of capital (WACC) for Falcons Footwear.