Enterprises has determined its optimal capital structure, which is composed of the following sources and target market value proportions - long-term debt 30%; preferred stock 5%; and common stock 65%. Debt: The firm can sell a 20-year, $1,000 par value, 7 percent semi-annual coupon bond for $1,020.

Preferred Stock: The firm has determined it can issue preferred stock at $100 per share par value. The stock will pay an $8.00 annual dividend.

The firm's common stock is currently selling for $40 per share. The dividend expected to be paid at the end of the coming year is $2.57. Its dividend payments are expected to grow at 4.5% per year going forward. Investors demand an 11% return to invest in the firms stock.

Tax Rate: The firm's marginal tax rate is 40 percent.

Flotation Costs: Ignore flotation costs in all your calculations.

d) Calculate the firm's weighted average cost of capital.