Echo Company currently has 3 million shares of common stock outstanding with a price of $25.00 per share. The firm is expected to pay a $2.50 common dividend one year from today, and that dividend is expected to increase by 6 percent per year forever. The firm also has an issue of 1.5 million preferred shares outstanding with a market price of $10.00. The preferred shares offer an annual dividend of $1.50. The firm typically pays floatation costs of 3% of the price on all newly issued securities. Delta Industries currently has outstanding 35,000 semi-annual coupon bonds, with a par value of $1,000, and a cost of debt capital 10% interest pre-tax. The firm is subject to a 35 percent marginal tax rate
Compute the WACC for Echo Company given the above information: