Consider the data on the following data; calculate the individual costs for each security and the weighted average cost of capital (WACC). Then comment on your findings.

Percent of capital structure:

Debt ..................................................................30%

Preferred stock ....................................................15

Common equity ...................................................55

Additional information:

Bond coupon rate ...............................................13%

Bond yield to maturity .......................................11%

Dividend, expected common ............................$3.00

Dividend, preferred .........................................$10.00

Price, common .................................................$50.00

Price, preferred ................................................$98.00

Flotation cost, preferred ....................................$5.50

Growth rate ...........................................................8%

Corporate tax rate ...............................................30%