Assume that your firm's marginal tax rate is 35% and that your firm has the following capital structure:
Bonds
coupon rate = 6%
yield-to-maturity = 5.5%
Market value of bonds = $25 million
Book value of bonds = $30 million
Common stock
Book value of common shares = $25 million
Market value of common shares = $50 million
Required rate of return (r) = 10.5%
What is your firm’s Weighted Average Cost of Capital (report as a raw number, i.e. if it is 10.43%, plug in 10.43) ?