2. A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions: Target Market Source of Capital Proportions Long-term debt 30% Preferred stock 5 Common stock equity 65 Debt: The firm can sell a 12-year, $1,000 par value, 11 percent bond for $990. A flotation cost of 3 percent of the face value would be required. Additionally, the firm's marginal tax rate is 30 percent. Preferred Stock: The firm has determined it can issue preferred stock at $70 per share par value. The stock will pay an $7.00 annual dividend. The cost of issuing and selling the stock is $4 per share. Common Stock: The firm's common stock is currently selling for $38 per share. The dividend was paid at the end of last year $5.07. Its dividend payments have been growing at a 6% constant rate for the last five years. It is expected that to sell, a new common stock issue must be underpriced at $1 per share and the firm must pay $1 per share in flotation costs. Calculate the firm's weighted average cost of capital assuming the firm has exhausted all retained earnings