Irving Oil currently has $50,000,000 in bonds outstanding with a coupon rate of 6% paid semiannually and a maturity of 10 years. The bonds are currently selling at a quoted price of $90. The company also has 50,000 shares of 10% preferred stock outstanding ($100 par), currently selling for $95 per share. The company has 1,000,000 common shares outstanding, selling for $60 per share. The firm has a tax rate of 40%, along with a beta of 1.75, a ROE of 20%, and last a dividend payout ratio of 40%. The firm just paid a dividend of $2 per common share. Flotation cost to issue new debt is 2%, new preferred share is 4%, and new common share is 6%. The firm has $5,000,000 in internally generated funds available.

Calculate the discount rate the firm should use to evaluate projects with the same level of risk as the firm.