Snowman Inc., a manufacturer of snowblowers and small tractors, is evaluating its proposed new cost of capital since it is planning to issue new capital and significantly change its capital structure. Management has provided the following information: Snowman currently has six million common shares outstanding with a current market price of $8.00 per share. Snowman is planning to issue one million preferred shares at a current market price of $4.75. The preferred shares will pay an annual dividend of $0.32 per share. Snowman will issue $30 million long-term bond that will mature in 12 years. The bond will bear interest at 6% per year, payable semi-annually. Currently the market yield required on these bonds (YTM) is 5%. With the issuance of the new bonds and preferred shares, the common shares will have a beta of 1.45. The current risk-free rate is 3% and the market risk premium is 6%. Flotation costs are estimated to be 2% after tax on new debt and 3.5% before tax on new preferred shares. Snowmans marginal tax rate is 27%. Required: Calculate Snowmans WACC using flotation costs