The case of Green Penguin Pencil Company Green Penguin Pencil Company is considering a new project that will require an initial investment of $45 million. It has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. Green Penguin Pencil has noncallable bonds outstanding that mature in five years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell new shares of preferred stock that pay an annual dividend of $9 at a price of $92.25 per share. Assume that Green Penguin Pencil new preferred shares can be sold without incurring flotation costs. Green Penguin Pencil does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $22.35 per share, and it is expected to pay a dividend of $2.78 at the end of next year. Flotation costs will represent 3% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 40%. Green Penguin Pencil's WACC for this project will be: (Hint: Round your answer to two decimal places.) 13.02% 12.34% 13.71% 10.97%