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The balance sheet for NickelBack-Hoe Equipment Implements Inc. (NHE) is provided below along with other selected financial data. 1. Short-term debt is permanent in nature. The company currently pays6% and short-term borrowing costs are not expected to change over the next year. Short-term debt is valued at par. 2. Long-term debt is a 12-year 7.5% coupon bond paid semiannually. The bond currently trades for 102% of par. 3. The company has 25 million shares outstanding with market price of $11. Based on forecasts, it is anticipated that new equity capital required will come from internal sources. Net income for the most recent year is $20 million, and the company's tax rate is 35%. 4. Government 1-year Treasury bills are yielding 3%, while 10-year government bonds yield 5.5%. Inflation is currently running at 1.5%. 5. The beta for NickelBack-Hoe's stock is 1.2, and the market risk premium is 5%. Although the company has not paid a dividend on its common stock in the past, the company's new dividend policy calls for dividends to be paid starting next year. Dividends will be 40% of earnings, whereas growth in earnings is expected to be 8% per year. Based on the above information, calculate NickelBack-Hoe's WACC