A firm is raising funds by selling a package of equity, debt and preferred stock.
The details of the package are:
1) Equity sold for $20 million. Expected perpetual dividends to buyers is $2.17 million per year.
2) Preferred stock sold for $5 million. Expected perpetual dividends to buyers is $0.4 million per year.
3) Debt sold, perpetual risk-less (guaranteed) coupon payments to be $4 million a year and is discounted at a rate of 4.07% per year.
Assume no taxes and other Modigliani-Miller assumptions also hold.
What is the WACC for the firm?