The Stowe Company has employed you to determine its weighted average cost of capital. The net income is projected to be $1,664,646 during the coming year. The marginal tax rate is 40%.

Bond 1:

50,000 bonds valued at $1,050 with a coupon rate of 7.5 percent and matures in 20 years. Assume semi-annual coupon payments.

Bond 2:

100,000 bonds valued at $1,025 has a yield to maturity of 5.318 percent and matures in 30 years. Assume semi-annual coupon payments.

Preferred Stock:

1,000,000 shares of 5.5 percent preferred selling at a price of $75.

Common Equity:

Stowe has 10,000,000 shares of common stock selling for $40 per share. The firms beta is 1.25. The firm just paid a dividend of $2.50 and the dividend growth rate is 5 percent

Market:

The expected return on the market is 13% and the risk free rate is 4 percent.

Determine the weighted average cost of capital.

(Provide Excel functions please)