Question: Assume that you have been hired as a consultant by Bluefield Corporation, a major producer of chemicals and plastics, including plastic grocery bags, Styrofoam cups, and fertilizers, to estimate the firm's weighted average cost of capital. Bluefield Corporation has 500 million shares of common stock outstanding, 7.5 million shares of preferred stock outstanding, and 2.5 million 11% semiannual coupon bonds outstanding, par value $1,000 each. The common stock currently sells for $40 per share and has a beta of 1.2, the preferred stock currently sells for $75 per share and pays an annual dividend of $7 per share, and the bonds have 15 years to maturity and sell for 93.5 percent of par. The market risk premium is 6%, the yield on Treasury bills is 4%, and Bluefield's tax rate is 35%. What is the firm's weighted average cost of capital?