Jackson Company wants to determine its WACC and has gathered the following information:

Debt. The firm can raise debt by selling CAD 1,000 par value, 8.00% coupon rate, 20-year bonds with semi-annual interest payments. To sell the issue, a discount of 3.00% will have to be given.

Preferred shares. The firm can sell preferred shares with CAD 95.00 stated value and an 8.00% dividend rate. The preferred shares sell currently for CAD 90.00.

Common equity. The firms common shares are currently selling for CAD 90.00 per share. The firm expects to pay cash dividends of CAD 7.00 per share next year. The firms dividends have been growing at an annual rate of 6.0%, and this is expected to continue.

Jackson Company has decided that a target capital structure of 30.0% equity, 20.0% preferred shares, and 50.0% debt is desirable. The marginal tax rate is 25.0%. Company policy is not to include issuance costs in the cost of capital.

REQUIRED:

1. Calculate Jackson Companys WACC