Daphney Corporation has 20,000 shares of $\$ 10$ par value common stock outstanding. Stockholders expect to receive annual dividends of $\$ 2$ per share. In addition, the corporation has issued $\$ 100,000$ of 10 percent bonds. The corporation has also accumulated $\$ 25,000$ in eamings that have been retained in the company. If this cash were deposited in money market certificates, it would earn 12 percent interest. Using the weighting procedure discussed in the chapter, calculate Daphney Corporation's cost of capital. (Ignore taxes in calculating the cost of debt.)