The capital structure of Jolly Jellybeans Corp. is as follows:

Debt: 40%

Preferred stock: 10%

Common stock: 50%

Additional information about the company is also given:

Price of common stock	$35
Dividend (common stock)	$1.25
Growth rate (common stock)	5%
Price (preferred)	$80
Dividend (preferred)	$6.25
Flotation cost (preferred)	$2.00
Bond YTM	8%
Corporate tax rate	25%

Compute Jollys WACC.

(Hint: Start with computing the costs of each component in the capital structure.) State your answer as xx.xx% (for example 13.65%)

Answer:

(a) %