Suppose that Allied Inc. plans to raise $$100$ million in order to expand its main

facility. The company would like to keep its current capital structure: $60\%$ in debt and

$40\%$ in equity. Therefore, the company plans to raise $$100$ million in according with the

current capital structure. Compute the weighted average cost of capital $($WACC$)$ to raise

$$100$ million. Use the following information: real risk free rate is $2\%$; inflation premium

$=2\%$; liquidity premium for its debt instrument $=0\mathrm{.}5\%$; maturity premium for the $10$

year coupon bond $=1\mathrm{.}5\%$; default risk premium $=0\mathrm{.}5\%$; tax rate $=26\%$; required rate of

returns on the stock market $=8\%$; the beta of this company stock $=1\mathrm{.}2$