You have the following balance sheet and information about FedEx:

Balance Sheet:

Assets

Liabilities & Shareholders' Equity

Current Assets

$31,000,000

Current Liabilities

$28,000,000

PP&E

$197,000,000

Long-term Debt (Corporate Bonds)

$105,000,000

Equity

$95,000,000

Total

$228,000,000

Total

$228,000,000

• FedEx has 16 million shares outstanding.
• FedEx's shares have a beta of 1.6 and are currently trading for $15 per share.
• The expected market risk premium is 7%.
• The risk-free rate is 1%.
• The debt is trading at 101% of book value.
• The coupon rate on existing debt is 5%
• The yield to maturity on existing debt is 3%.
• The corporate tax rate is 21%.

Compute FedEx's weighted-average cost of capital (WACC). (14 points)