Tanoa Ltd is the Fijian subsidiary of a large Australian company. Most of the shareholders are overseas residents who cannot utilise imputation credits. The company is interested in calculating its weighted average cost of capital and has presented you with the following data: I. $500000 can be borrowed from the bank for a term of 10 years. The bank will charge Tanoa Ltd an annual effective rate of 12% pa. II. Preference shares have a market price of $7 and pay an annual dividend per share of $0.85. Flotation costs will be 3.7% of the issue price of $7.80. III. The firm has $400000 of retained earnings available for investments. IV. Tanoa Ltd 's ordinary shares have a market value of $7.50 per share. The next dividend is expected to be $0.75. The current growth rate of 1/2% is expected to continue indefinitely. Flotation costs will be 2.8% for shares issued at $7.25 each. The corporate tax rate is 30 per cent. The target capital structure is as follows: Required: Calculate the appropriate WACC for Tanoa Ltd to use, assuming no retained earnings are available for investing in new projects