Tonor Industries is considering a new project and they need an estimate of WACC to perform the

valuation using the IRR method. This is what is known about the company:

Current stock price is $$47.$ The firm's beta is $0\mathrm{.}4.$ Current risk$-$free rate is $2\%,$ market risk premium is

$9\%,$ and the expected return on the market is $11\%.$ The latest dividend is $$1\mathrm{.}10.$ The firm's expected

growth rate is $4\%.$ There are $200,000$ stocks outstanding. $($Hint: use your best estimate of the cost of

equity for WACC estimation, that is$,$ find the average of the two models$).$

The firm also has some debt outstanding with par value of $$1,000.$ Current quote is $95.$ The bonds

pay $8\%$ coupons semiannually and there are $20,000$ bonds outstanding. The bonds mature in $25$

years. The firm's tax rate is $21\%.$

Finally, the firm has $40,000$ preferred stocks outstanding with the price of $$23$ each and a dividend

of $$1\mathrm{.}15.$

The new project will be riskier than the average project of the firm.

Question $1.$ What is the firm's WACC?