United Petroleum (UP), a diversified oil company, is considering taking over Deepwater Exploration Corp. (Deepwater), an offshore exploration company. You are the financial analyst of UP and are asked to collect historical data on the risk-free rates and the market risk premiums. Your estimates as of January 2050 are summarized as follows:

	Mean, annualized
Estimation period	Risk-free rate		Market risk premium
Oct 2049Dec 2049	0.05		0.00
Jan 2020Dec 2049	0.07		0.06

Suppose the unlevered asset beta u for the offshore exploration business is estimated at 1.30. Additionally, assume that UPs leverage ratio of 25% (equivalently a debt-to-equity ratio of 1/3), its debt beta of 0.1, and a marginal tax rate of 40% will apply to the Deepwater acquisition project. Find the weighted average cost of capital (WACC) for the acquisition