PULLIng Marginal Incorporated ( MI ) has determined that its before - tax cost of debt is 5 0% for the first $74 million in bonds it issues , and 90% for any bonds issued above $74 million . Its cost of preferred stock is 15 0% . Its ost of internal equity is 18 0% , and its cost of external equity is 22 0% . Currently , the firm's capital structy has $ 400 million of debt , $60 million of preferred stock , and $540 million of common equity . The firm's marginal tax rate is 25 % . The firm's managers have determined that the firm should have $67 million available from retained earnings for investment purposes next period . What is the firm's marginal cost . capital at a total investment level of $62 million