Problem:
Hurricane Corporation is financed with debt, preferred equity, and common equity with market values 0f $20 million, $15 million, and $30 million, respectively. The betas for the debt, preferred stock, and common stock are 0.3, 0.6, and 1.3, respectively. If the risk-free is 3.99 percent, the market risk premium is 6.05 percent, and Hurricane's average and marginal tax rates are both 30 percent. The company's cost of capital is the cost of debt is 4.61, the cost of common equity is 5.23, and cost of preferred equity is 6.67.
Required:
Question: What is the company's weighted average cost of capital?
Note: Please provide reasons to support your answer.