Response to the following problem:
WACC. Blues, Inc., is an MNC located in the United States. Blues would like to estimate its weighted average cost of capital. On average, bonds issued by Blues yield 9 percent. Currently, T-bill rates are 3 percent. Furthermore, Blues' stock has a beta of 1.5, and the return on the Wilshire 5000 stock index is expected to be 10 percent. Blues' tar- get capital structure is 30 percent debt and 70 percent equity. If Blues is in the 35 percent tax bracket, what is its weighted average cost of capital?