Jim Falls Dairies has a capital structure consisting of 55% debt and 45% common stock. The companys CFO has obtained the following information:

1- The before-tax YTM on the companys bonds is 8%.

2- The companys common stock is expected to pay a $3.00 dividend at year end (D1 = $3.00), and the dividend is expected to grow at a constant rate of 4% a year. The common stock currently sells for $60 a share.

3- Assume the firm will be able to use retained earnings to fund the equity portion of its capital budget.

4- The companys tax rate is 25%.

What is the companys WACC?

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