(Suggested time:15 minutes; Difficulty level: Easy) (16 marks) Simi Inc. has several bond issues outstanding, each making semi-annual interest payments. The bonds are listed in the following table. Bond Coupon Rate Price Quote Maturity Face Value 1 4.00 % 98.58% 4 years $ 65,000,000 2 8.00 % 105.50% 8 years 50,000,000 The company has a beta of 1.2. The company has 200,000 outstanding shares, each traded at $500 in the market. It also has 100,000 preferred shares paying constant annual dividends, currently priced at $35 per share. The most recent dividend on preferred stocks was $2. The risk-free rate is 4% and the expected return on the market portfolio is 9%. Required: If the corporate tax rate is 38%, what is the weighted average cost of capital? Hint: Calculate the market values of the bond issues and use them to calculate the weighted average cost of debt