Robert Adams is a financial analyst with Lake Entertainment plc (LE) Robert is estimating the companys cost of capital, and he has compiled relevant information for his analysis. LE has just paid a dividend of 8 per share in 2015 (current year). The companys dividends have been increasing at a steady growth rate of 5% per year and the market expects that to continue. The current price of LEs share is 35. LE has a debt-to-equity (D/E) ratio of 2. The before-tax required return on LEs debt is 8 percent. LEs tax rate is 35 percent.

Calculate the weighted average cost of capital (WACC) of LE.