Calculate the WACC for EZjET assuming the following information.

The airline has debt outstanding at $1.1 billion and LIBOR is +

2.75 percent.

The airline has 20 million shares of preferred stock currently outstanding, which is trading at $10 per share and pays an annual dividend of $0.80 per share.

The airline has 300 million shares of common stock outstanding, which is currently trading at $2 per share, paying an annual dividend of $0.10 per share, and is expected to grow at a rate of 12, percent for the foreseeable future, and the current LIBOR rate is 3 percent.

The airline does not expect to earn a profit for the year; therefore it will have no retained earnings. The airline’s marginal tax rate, when profitable, is 40 percent.