Mirha Corp. recently hired you to estimate their cost of capital. The firm’s capital structure consists of 40% debt, 40% common equity and 20% preferred equity. The firm has outstanding bonds with original maturity of 25 years, effective maturity of 12 years, par value of $1,00 and an annual coupon of 5%. The bond currently trades for $713.57. The firm’s preferred shares offer a preferred dividend of 7%, par value of $100 and are currently trading for $80. The firm does not plan on issuing new shares of common equity. It will retain earnings instead. Management has no preferred method for calculating the cost of retained earnings but they provide you with the following information: The company expects constant growth of 5% in perpetuity. The common shares recently paid a dividend of $3.92 and are currently trading for $56 per share. The company has a beta of 1.4, the risk-free rate is 2%, and the market risk premium is 8%. Also, the company’s common stock is risky enough that it commands a premium of 4% over the company’s debt. If the firm faces an average state-plus-federal tax rate of 30%, what is Mirha Corp’s cost of capital?