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Lake Manufacturing Financials Income Statement Balance Sheet 12 months ending 2012 Year ending 2012 2011 Sales $9,300,000 Cash 50,000 40,000 Cost of goods sold 5,750,000 Accounts receivable 570,000 600,000 Depreciation expense 550,000 Inventory 530,000 460,000 Gross profit 3,000,000 Total current assets 1,150,000 1,100,000 Selling & admin expenses 2,200,000 Fixed assets 2,050,000 1,400,000 EBIT 800,000 Total assets $3,200,000 $2,500,000 Interest expense 200,000 Profit before tax 600,000 Accounts payable 320,000 300,000 Taxes 375,000 Bank loans 480,000 400,000 Net income $225,000 Total current liabilities 800,000 700,000 LT Bonds 1,500,000 1,000,000 Shares-diluted 200,000 Total liabilities 2,300,000 1,700,000 Common stock 200,000 200,000 Retained earnings 700,000 600,000 Total equity 900,000 800,000 Total liab. & equity $3,200,000 $2,500,000 What is Lake's closest weight average cost of capital (WACC), if its current balance sheet accurately shows the market value of its debt and equity? Assume Lake's tax rate is 25% and its cost of equity is 10%. 3% 05% 8% O 12%