You have been assigned to calculate the Weighted-Average-Cost-of-Capital for your firm, which has two sources of long-term capital. The company's marginal tax rate is 25%.

First there are 207,500 shares of common stock, currently selling for $39.93. You estimate that the firms beta is 0.75. The current return on short term T-Bill is 2.25% and you expect the lon-term return on the stock market to be about 9.75%.

Second there is an issue of 4,500 coupon bonds with a face value of $1,000 which pays 5.10% (annual) coupons, and mature in 14 years. These bonds are currently trading for $950.

What is the firms Weighted Average Cost of Capital?