Problem:
A company you are researching has common stock with a beta of 1.51. Currently, Treasury bills yield 3%, and the market portfolio offers an expected return of 12%. The company finances 40% of its assets with debt that has a yield to maturity of 6%. The firm also uses preferred stock to finance 10% of its assets. The preferred stock has a current price of $12 per share and pays a level $1 dividend. The firm is in the 35% tax bracket.
Requirement:
Question: What is the weighted average cost of capital?
Note: Please show guided help with steps and answer.