Coleman Technologies is seriously considering a major expansion project that had been proposed by the marketing department. You have been asked to estimate the cost of capital (WACC) for this project. The following information has been provided to you. (a) The company's marginal tax rate is 22.6%. (b) The current price of Coleman's 12 percent coupon, semiannual payment, non-callable bonds with 13 years remaining to maturity is $1,271.12. (c) The current price of the company's 10 percent, $100 par value annual dividend perpetual preferred stock is $113.10. (d) Coleman's beta is 1.27, and the risk-free rate is 7 percent. The market risk premium is estimated to be 7.25%. Company management uses the CAPM to estimate the cost of common equity. (e) The desired level of financing is 25% debt, 10% preferred, and 65% common equity. What discount rate should the company use in valuing this project based on these inputs? Show your work.