1. The capital structure of Matalan is below Source Target market proportions ___________________________________ Long term debt 45% Preferred stock 15 Common stock equity 40

PREFERRED STOCK: The firm has determined it can issue preferred stock at $62 per share par value. The stock will pay an $6.00 annual dividend. The cost of issuing and selling the stock is $2.9 per share. DEBT: The firm can sell a 15-year, $1,000 par value, 11 percent bond for $900. A flotation cost of 2.5 percent of the face value. COMMON STOCK: The dividend expected to be paid at the end of the coming year is $5.07 and the selling price is $49. Its dividend payments have been growing at a constant rate for the last 6 years. Six years ago, the dividend was $2.45. the cost of issuing the stock was $2.5. the firm's marginal tax rate is 30 percent. What is the cost of capital of the firm? If you are a finance manager of the company and your task is to reduce the cost of capital. In this situation how you can minimize the cost. Explain