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Assume the following capital structure:
Debt 30%
Preferred stock 20%
Common equity 50 %
The following facts are provided:
Bond yield to maturity 6%
Corporate tax rate 35%
Dividend, Pre. Stock $2.00
Price, Pre. Stock $35.00
Floatation, Pre. stock $1.00
Dividend (Do), Com. Stock $2.00
Price, Com. Stock $25.00
Growth rate, Com. Stock 4%
Compute the weighted average cost of capital