Johnson Industries finances its projects with 40% debt, 10% preferred stock, and 50% common stock.
· The company can issue bonds at a YTM of 8.4%.
· The cost of preferred stock is 9%.
· The risk-free rate is 6.57%.
· The market risk premium is 5%.
· Johnson Industries' beta is equal to 1.3.
· Assume that the firm will be able to use retained earnings to fund the equity portion of its capital budget.
· The company's tax rate is 30%.
What is the company's WACC?