Suppose that you work as an equity analyst at an investment bank. You need to find a weighted average cost of capital for a firm, which you will use in your valuation model. You found the following information for this firm: - It is financed with equal amount of debt and equity, i.e. its debt-to-equity ratio is 1 - Its cost of debt is 3.5% - The equity beta is 1.2 The economic forecasting division of your bank advises you to use a market risk premium of 6% and a risk-free rate of 2% in your model. Suppose that the assumptions of the Modigliani-Miller theorem hold. In particular, assume that corporations do not pay corporate income taxes. What is the weighted average cost of capital of this firm