=+LG 3 LG 4 P9–16 Cost of capital GB Timbers GmbH, based in Germany, supplies timber products to construction and manufacturing industries. The company reported after-tax earnings available to common stock of €3,200,000. From these earnings, the management decided to pay a dividend of €0.80 on each of its 4,000,000 common shares outstanding. The capital structure of the company includes 30% debt, 40% common stock, and 30% preferred stock. The tax rate applicable to GB Timbers is 30%.