You have collected the following information on Moose Pastures Inc $($MPI$,$ a publicly trade company. What is the WACC of MPI. $($Express the cost of debt as an equivalent annual return.$)$

Debt

There are two bond issues. The first is a $10\%$ coupon bond selling at par. The bond pays semi annual coupons and has $12$ years to maturity. The book value is $3,000,000.$

he second bond is identical in every respect except the coupon rate. The coupon rate is $7\%$ and there are $5,000$ bonds outstanding. $($Face value $=$$$1,000)$

Common stock

$1,000,000$ shares outstanding with a book value of $$8,000,000.$ The shares are expected to pay a dividend of $$0\mathrm{.}75$ annually and the growth rate of dividends is $4\mathrm{.}2\%.$

Preferred shares

$50,000$ shares of $12\%$ preferreds, $($$$100$ par value$)$ selling for $$98$

Market

Tax rate $=40\%,$ risk free rate $=3\%$; market risk premium $=8\%$ equity beta $=1\mathrm{.}40$