ZYX, Inc. recentlyhired you as a consultant to estimate the company's WACC. You have obtained the following information.

- ( 1) The firm'snoncallable bonds mature in 2 5years, have an 5 .50 %semi-annualcoupon, a par value of $1,000, and a market price of $905.00 .The firm has 800,000 bonds outstanding.

- ( 2) The company's tax rate is 40%.

- (3) The firm has 6%, $100 par value preferred stocks. There are 2 million shares outstanding. The preferred stock currently sells at $110 per share.

- (4)The risk-free rate is2.00 %, the market risk premium is 8.50%, and thecommon stock'sbeta is1.10 .

- (5) The firm has 15 million shares outstanding of common stocks which sells at $80 per share. The firm just paid a dividend of $2.25 per share, and the constant growth rate is expected to be 7%.

- (6) Thefirmwould like to use the average of the two methods (i.e. CAPM and DCF) toestimate the cost of equity, and it does not expect to issue any new common stock.

Whatis its WACC?Do not round your intermediate calculations.