Pacific Intermountain Utilities Company has a present capital structure $($which the company feels is

optimal$)$ of $50\%$ long$-$term debt, $10\%$ preferred stock, and $40\%$ common equity. For the coming year,

the company has determined that its optimal capital budget can be externally financed with $$70$ million

of $10\%$ first$-$mortgage bonds sold at par and $$14$ million of preferred stock costing the company $11\%.$

The remainder of the capital budget will be financed with retained earnings. The company$$s common

stock is presently selling at $$25$ a share, and next year$$s common dividend is expected to be $$2$ a share.

The company has $25$ million common shares outstanding. Next year$$s net income available to common

stock $($including net income from next year$$s capital budget$)$ is expected to be $$106$ million. The

company$$s past annual growth rate in dividends and earnings has been $6\%.$ However, a $5\%$ annual

growth rate in earnings and dividends is expected for the foreseeable future. The company$$s marginal

tax rate is $40\%.$ Calculate the company$$s weighted cost of capital for the coming year.