Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Line up the calculations in the order shown in Table.
Percent of capital structure:
Preferred stock .............20%
Common equity ............40
Debt .................40
Additional information:
Corporate tax rate ...........34%
Dividend, preferred ........... $8.50
Dividend, expected common ........ $2.50
Dividend, preferred .......... $105.00
Growth rate ..............7%
Bond yield ...............9.5
Flotation cost, preferred ......... $3.60
Price, common ............ $75.00