The State Company currently has 9% coupon paying annual bonds of $1,000 face value outstanding in the market with 10 years of maturity with the yield to maturity being 7.21%. They also have common stocks priced at $40.15 that just today paid a dividend of $3.15 and expected to grow at 2% annually. Moreover, they also have preferred stocks which pays $4.5 as dividends with market price of $81.95. Out of the $250,000 of its total capital, $80,000 is financed by debt and $20,000 through preferred stock. Rest of the capital is financed via common stock.

Requirements:

A. If the company is in the tax bracket of 31%, what is its weighted average cost of capital (WACC)?