Custom Computers has the following capital structure:

The common stock is currently selling at $$25$ a share, pays a cash dividend of $$1\mathrm{.}10$ per share and is

growing annually at $6\%.$ The preferred stock pays a cash dividend of $$9$ and currently sells for $$91$ a

share. The debt pays interest of $8\%$ annually and the company is in the $30\%$ marginal tax bracket.

a$)$ Determine the company's weighted$-$average cost of capital.

b$)$ What is the new cost of common stock if the company had to pay underwriting fee of $4\%?$

c$)$ If a company uses too much debt financing, why does the cost of capital rise?