Johnson Industries finances its projects with 40 percent debt, 10 percent preferred stock, and 50 percent common stock.

• The company can issue bonds at a yield to maturity of 10% percent.
• The cost of preferred stock is 12 percent.
• The company's common stock currently sells for $40 a share.
• The company's dividend is currently $1.50 a share (D₀ = $1.50), and is expected to grow at a constant rate of 8 percent per year.
• Assume that the flotation cost on debt and preferred stock is zero, and no new stock will be issued.
• The companys tax rate is 25 percent.

What is the companys weighted average cost of capital (WACC)? Show work.