1. Royce Manufacturing must calculate its weighted cost of capital in order to evaluate new investment opportunities. The firm's current capital structure, which it considers optimal, consists of 40% debt, 10% preferred stock and 50% common equity. The firm has determined each component cost of capital, as follows: Debt Preferred stock Common stock After-Tax Cost 8.4% 14.0% 15.2% Calculate Royce's weighted cost of capital. 2. What is the after-tax cost of preferred stock for Gateway, a computer company, which wants to sell 25 million shares of $9.00 participating preferred stock to the public for $100 per share