Phil’s is a subsidiary of Greggs. The parent company - Greggs maintains a debt-equity ratio of 0.65 and has a tax rate of 32%. The pre-tax cost of debt is 9.8%. There are 25,000 shares of equity...

Phil’s is a subsidiary of Greggs. The parent company - Greggs maintains a debt-equity ratio of 0.65 and has a tax rate of 32%. The pre-tax cost of debt is 9.8%. There are 25,000 shares of equity outstanding with a beta of 1.2 and a market price of £19 a share. The market has a 12.1% rate of return, and the current risk-free rate is 3.6%. This year, the firm paid an annual dividend of £1.10 a share and expects to increase that amount by 2% each year. Using an average expected cost of equity, what is Greggs’ weighted average cost of capital?