Northwest Uity Company faces increasing needs for capital Fortunately, it has an A3 credit rating The corporate tax rate : 40 percent. Northwest's treasure is trying to determine the corporation's current weighted average cost of capital in order to assess the profitability of capital budgeting projects Historically, the corporation's earnings and dividends per share have increased about 23 percent annually and this should continue in the future. Northwest common stock is selling at $79 per share, and the company will pay a $6.30 per share dividend (0) The company's $126 preferred stock has been yielding 4 percent in the current market. Rotation costs for the company have been estimated by its investment banker to be $300 for preferred stock The company's optimum capital structure is 55 percent debt 10 percent preferred stock, and 35 percent common equity in the form of retained earnings Refer to the following table on bond issues for comparative yields on bonds of equal risk to Northwest Dute on Bond Moody's Vield to Inne Rating Price Maturity utilities Seuthwest electric power1/4 2025 1.18 8.5 Pacific hell--> 3/8 2025 0.25 8.53 Pennsylvania slut 1122002 . Industrials: Johnson & Johnson - 2003 Ae 0.24 Dillard's Department Stores 1/8 2023 A 30.93 Marriott Corp.-es 3.5 a. Compute the cost of debt. (use the accompanying table-relate to the utility bond credit rating for yield) (Do not round intermediate calculations. Input your answer is a percent rounded to 2 decimal places.) Coul of debt b. Compute the cost of preferred tock (Do not round imermediate calculation. Input your answer as a percent rounded 2 decimal places) Custoffen e. Compute the cost of common equity in the form of retained eaming, K. Do not round intermediate calculations. Input your answer se percent rounded to 2 decimal places Caste comme . Calculate the weighted cost of each source of capital and the winghted average cost of CR (Do not rouna intermediate calculations. Input your answers percent rounded to 2 decimales We Gost Det Prelec Common 0.00