J&J, Inc. has to evaluate its cost of capital. J&J expects to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a $2.50 per share dividend at $25 a share. Their current stock is $20.00 a share and expects to pay a dividend of $1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. J&J, Inc. marginal tax rate is 35%. If J&J, Inc. raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is their cost of capital?