The companys financial analyst has advised Healthy Options to use the weighted average cost of capital as the appropriate discount rate to evaluate the project. Information about the companys sources of financing is provided below: The company will contract a new loan in the sum of $2,000,000 that is secured by machinery and the loan has an interest rate of 6 percent. Healthy Options has also issued 4,000 new bond issues with an 8 percent coupon, paid semiannually, and which matures in 10 years. The bonds were sold at par, and incurred floatation cost of 2 percent per issue. The companys preferred stock pays an annual dividend of 4.5 percent and is currently selling for $60, and there are 100,000 shares outstanding. There are 300,000 million shares of common stock outstanding, and they are currently selling for $21 each. The beta on these shares is 0.95.

1. Determine the weighted average cost of capital (WACC) for Healthy Options. (9 marks)