Sam Ltd: Selected Balance Sheet Data

	$
Liabilities
Accounts Payable	150000
8% Debentures, $1000 per value	1000000
Mortgage loan	500000
Shareholder's Fund
6% Preference shares, $500 par value	500000
Ordinary shares, issued and paid up at $4	2000000
Retained earnings	300000

Debentures currently outstanding were sold at a face value of $1,000 and pay a semi-annual coupon at a rate of 8% per annum. The outstanding debentures have five years to maturity. A new issue on similar terms would require a coupon rate of 7% per annum to be fully subscribed at face value. The term of the mortgage loan is 20 years and it has eight years remaining until maturity. A fixed monthly repayment of $8,000 would enable the outstanding principal of $500,000 to be fully repaid (with interest) at maturity. Sam Ltd has just issued new 6% preference shares at a par value of $500 per share. The costs of issuing and selling the preference shares were $0.50 per share. The ordinary shares are currently trading at $5.50 each. The systematic risk of Sam Ltds equity is 1.5, the risk-free interest rate is 4.5%, and the expected market risk premium is 10%. The company income tax rate is 30 cents in the dollar. You are required to compute the weighted average cost of capital (WACC) for Sam Ltd.