The Crane Products Co$.$ currently has debt with a market value of $$250$ million outstanding. The debt consists of $9$ percent coupon

bonds $($semiannual coupon payments$)$ that have a maturity of $15$ years and are currently priced at $$1,141\mathrm{.}55$ per bond. The firm also

has an issue of $2$ million preferred shares outstanding with a market price of $$24$ per share. The preferred shares pay an annual

dividend of $$1\mathrm{.}20.$ Crane also has $14$ million shares of common stock outstanding with a price of $$20\mathrm{.}00$ per share. The firm is expected

to pay a $$2\mathrm{.}20$ common dividend one year from today, and that dividend is expected to increase by $4$ percent per year forever. If Crane

is subject to a $28$ percent marginal tax rate. Calculate the appropriate cost of capital for a new project that is financed with the same

proportion of debt, preferred shares, and common shares as the firm's current capital structure. Assume that the project has the same

degree of systematic risk as the average project that the firm is currently undertaking. Also assume that the project is in the same

general industry as the firm's current line of business. $($Round intermediate calculations to $4$ decimal places, e$.$g$.1\mathrm{.}2514$ and final answer to

$2$ decimal places, e$.$g$.15\mathrm{.}25\%.)$

Appropriate cost of capital

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