) LEI has the following capital structure, which it considers to be optimal:

Debt 25% Preferred stock 15% Common equity 60 % 100 %

LEIs tax rate is 40% and investors expect earnings and dividends to grow at a constant rate of 9% in the future. LEI paid a dividend of $3.60 per share last year, and its stock currently sells at a price of $54 per share. LEI can obtain new capital in the following ways: Preferred: New preferred stock with a dividend of $11 can be sold to the public at a price of $95 per share. Debt: Debt can be sold at an interest rate of 12%. Calculate the Weighted average cost of capital (WACC). [7]