Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics areyielding 6.75 percent. The company also has750,000 sharesof7 percent preferred stock and2.5 million shares of common stock outstanding.The preferred stock sells for $53 a share.The common stock has a beta of 1.34 and sells for $42 a share. The U.S. Treasury bill isyielding 2.8percent and thereturn on the market is 11.2 percent. The corporatetax rate is 38percent. What is the firm's weighted average cost of capital?