Oates Ltd. has the following capital structure:

5 million ordinary shares; par value of $S each and current market value of S7 each.

500,000, $10 par value, 6 percent preferred shares with a current market value of $7.50 each

50,000 bonds with a $1,000 face value and semi-annual coupon payments of $45 per bond. The bonds have 4 years to maturity and sell for 85 per cent of their face value.

Additional infomation:

Oates Ltd's ordinary shares have an estimated beta of0.85; the risk free rate of interest is 4.5 percent; the market risk premium is 7.5 percent.

Oates Ltd cash dividends over the past year totalled $0.35 per share

The corporate income tax rate is 30 percent.

Required: (a) Calculate Oates Ltd's weighted average cost of capital (WACC)