1. You are assigned to estimate the firms Weighted-Average-Cost-of-Capital (WACC) in order to evaluate capital budgeting opportunities. The company operates in the 20% marginal tax bracket. There are three classes of long-term liabilities and equity outstanding. (1) First, the firm has 127,500 shares of common stock outstanding, which are currently trading at $88.91 per share. You will use the Gordon Growth Model to estimate a required return for the equity holders. The most recent earnings per share was $6.72.You estimate that EPS will grow at an annual rate of 3.2% into the future. (2) There is an issue of 45,000 shares of preferred stock that have a $100 par value and pay 4.70% (perpetual) annual dividends. These shares are currently trading for $63.51. (3) There is an issue of 4,500 coupon bonds outstanding that have a face value of $1,000, mature in 18 years, and pay 5.75% (annual) coupons. These bonds are currently trading at 122.154% of par.

1. What is the weight on the common stock? 2. What is the weight on the preferred stock? 3. What is the weight on the coupon bonds?