WACC for a firm: The Imaginary Products Co. currently has $300 million of

market value debt outstanding. The 9 percent coupon bonds (semiannual pay) have

a maturity of 15 years and are currently priced at $1,440.03 per bond. The firm also

has an issue of 2 million preferred shares outstanding with a market price of $12.00.

The preferred shares offer an annual dividend of $1.20. Imaginary also has 14

million shares of common stock outstanding with a price of $20.00 per share. The

firm is expected to pay a $2.20 common dividend one year from today, and that

dividend is expected to increase by 5 percent per year forever. If Imaginary is

subject to a 40 percent marginal tax rate, then what is the firm's weighted average

cost of capital?