Jacobs Corp. wants to calculate its weighted average cost of capital (WACC). The

company's CFO has collected the following information:

The company's 30 year long-term bonds with 8% semiannual coupon are currently

sold at $950. The firm can issue bonds only

$100 million at this price. Beyond this

amount, the firm can issue the bonds at the same price, but the firm has to pay 9%

semiannual coupon.

The company's current stock price is $25 per share (P0 = $25).

The company recently paid a dividend of $2 per share (D0 = $2.00).

The dividend is expected to grow at a constant rate of 5 percent a year (g = 6%).

The company pays a 10 percent flotation cost whenever it issues new common

stocks (F = 10%).

The company's balance sheet shows 70% common stock and 30% debt.

The company's target capital structure is 80% common stock and 20% debt.

The firm expects to earn

$800 million

in after-tax income during the coming year,

and it will retain 80 percent of those earnings.

The company's tax rate is 21 percent.

What is the company's WACC if it must fund a capital budget requiring $700million in total new capital?