Flexplus PLC wants to know its weighted average cost of capital (WACC). The following information has been obtained.

There are 2,000,000 shares in circulation with a current market value of 5.

Current dividends are 35 pence each year and are expected to grow at a constant rate of 6% each year.

The annual pre-tax interest charge is 120,000 on an existing loan of 2,000,000.

There are 220,000 bonds in circulation with a face value of 10 with a pre-tax payment to bond holders of 10% each year. These bonds are currently trading at the market value of 9.

The tax rate for firms is currently 32% a)

Calculate the weighted average cost of capital. (75 marks)