5. 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 20% Preferred stock 10 Common stock equity 70 Debt: The fimm can sell a 15-year. $1.000 par value, 6 percent bond for $1060 A flotation cost of 2 percent of the face value would be required Additionally, the firm's marginal tax rate is 32 percent Preferred Stock: The firm has determined it can issue preferred stock at $70 per share par value The stock will pay a $9 annual dividend The cost of issuing and selling the stock is $4 per share Common Stock: A firm's common stock is currently selling for $28 per share the dividend expected to be paid at the end of the coming year is $2.54 Its dividend payments have been growing at a constant rate for the last four years. It is expected that to sell, a new common stock issue must be underpriced $3 per share in floatation costs Calculate the firm's weighted average cost of capital assuming the firm has exhausted all retained earnings 5. 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 20% Preferred stock 10 Common stock equity 70 Debt: The fimm can sell a 15-year. $1.000 par value, 6 percent bond for $1060 A flotation cost of 2 percent of the face value would be required Additionally, the firm's marginal tax rate is 32 percent Preferred Stock: The firm has determined it can issue preferred stock at $70 per share par value The stock will pay a $9 annual dividend The cost of issuing and selling the stock is $4 per share Common Stock: A firm's common stock is currently selling for $28 per share the dividend expected to be paid at the end of the coming year is $2.54 Its dividend payments have been growing at a constant rate for the last four years. It is expected that to sell, a new common stock issue must be underpriced $3 per share in floatation costs Calculate the firm's weighted average cost of capital assuming the firm has exhausted all retained earnings