You have gathered the following information for Frosty Ale, Inc., which has a 40 percent marginal tax rate.

2 million common shares outstanding

120,000 bonds outstanding

Current yield to maturity is 7%

Estimated market risk premium is 6%

Current common stock price is $25 per share

Current preferred stock price is $30 per share

90,000 preferred shares outstanding

Estimated beta of stock is 1.2

10 year U.S. Treasury yield is 4.8%

Annual preferred dividend is $3

Bonds are trading at par

Bonds have $1,000 face value

What is the firms weighted average cost of capital (WACC)? Be sure to very clearly label/identify each input or item and what you are doing to have the opportunity to receive partial credit.