Poon Noodle House's current capital structure is 70% equity, 25% debt, 5% preferred stock. This is considered optimal. Poon is considering a $50 million capital budgeting project. During the coming year Poon expects to have $15 million of retained earnings available to finance this capital budgeting project. The marginal tax rate is 40%.

-Poon can raise long-term debt at a pretax interest rate of 7%.

-Preferred stock can be sold at a $25 price with a $2 annual dividend. Issuance cost will be $3 per preferred share.

-Common stock can be sold at a $20 price. The common dividend is expected to be $3 next year. Dividends have been growing at an annual compound rate of 4% annually and are expected to continue growing at that rate into the foreseeable future. Issuance cost will be $4 per common share.

Calculate Poon's weighted average cost of capital that is appropriate to use in evaluating capital budgeting project.