1. The basic cost of capital equation Aa Aa The calculation of a firm's weighted, or overall, cost of capital involves calculating the weighted average of the required rates of return on the company's debt and preferred and common equity, where the weights equal the percentage of each type of financing in the firm's overall capital structure. The general formula for the computation of a firm's weighted cost of capital is: ko - 11E + B+ ) xke] + [E+B+P9 ) xkix(1-1)] + E+B+ ) * kg] where, kg the firm's weighted marginal cost of capital E in the firm's target capital structure the dollar amount of - the after-tax cos preferred stock common equity debt al common equity (retained eamings) B-the dollar amount of Jin the firm's target capital structure kd - the cost of the firm's debt capital T - the firm's tax rate Pf the dollar amount of in the company's target capital structure cost of the firm's preferred stock capital Taylor Company has a target capital structure that consists of $2.1 million of debt capital, $3 million of preferred stock financing, and $4.3 million of common equity. The corresponding weights of its debt, preferred stock, and common equity financing that should be used to compute its weighted cost of capital (rounded to the nearest wo decimal places) are: 0 31.92%, 45.75%, and 22.34%, respectively 45.75%, 22.34%, and 31.92%, respectively 23.46%, 36.71%, and 39.83%, respectively 22.34%, 31.92%, and 45.75%, respectively 0 0