Groceries Inc. has an unlevered cost of equity is 12% and a pre-tax cost of debt of 6%. Both the book and the market value of debt is $500,000. Earnings before interest and taxes (EBIT) are $200,000 (constant in perpetuity) and the tax rate is 40%. Assume there is no cost of financial distress. What is the companys weighted average cost of capital? Show our work.