Tom Company has a capital structure that consists of 35% debt, 25% preferred stock, and 40% common stock. Given the following information, compute Tom Companys weighted average cost of capital that will be used for capital budgeting decision making.

Price, Common: $58

Price, Preferred: $90

Flotation Cost, Preferred: $2.50

Growth Rate, Common: 5%

Corporate Tax Rate: 32%

Dividend, Preferred: $10.25

Dividend, Expected Common: $8.55

Bond Information:

Par Value $1,000

Remaining Years to Maturity 12

Coupon Rate 7.5%

Current Selling Price $822

Interest Payments Paid Annually