You are given the following information about your firm:

1. Your firm currently has 10-year debt outstanding that pays a dividend of $40

every six months, has a maturity value of $1,000, and currently sells for

$1,086.05. For calculating the WACC, the yield-to-maturity on new bonds

would be 0.20 percent greater than the yield-to-maturity on your current 10-

year debt because of maturity risk. That should be included in the WACC

calculation.

2. Your common stock has a beta of 1.50, while the risk-free rate is 4 percent,

and the risk-premium on the market is 8 percent.

3. The firm has a targeted capital structure of 40 percent debt and 60 percent

equity.

4. The firm has a marginal tax rate of 40 percent.

What is the weighted-average cost of capital for the firm?