Given the following information for Stellar Corporation, find the WACC (weighted average cost of capital). Assume that the companys tax rate is 30%. (Hint: Compute cost of each security, and weight of each security separately, and apply the WACC formula). (Grading will be based on allocating to computation of cost of securities; to computing weights; and to computing the WACC).

Common Stock: 20 million shares outstanding, selling for $4 per share; the beta is 1.05.

Preferred Stock: 5 million shares outstanding, selling for $5 per share, pays $1 annually per share.

Debt: 1 million 6% quarterly coupon bonds outstanding, $100 face value, 20 years to maturity, selling at par.

Market: 7.5% market return and 4.5% risk-free rate.