10 Despacito Inc., a salsa producer company, has 100,000 zero coupon bonds with $1,000 face value. The bonds have a maturity of 5 years and they are traded in the market at 84% of par. The company also has 8 million shares of common stock outstanding. The company sells common stock for $30 and it just paid (yesterday) a dividend of $1. Dividends are paid annually and are expected to grow in perpetuity at 5%. Despacito Inc. has 2 million preferred shares outstanding that are traded in the market for $20 and pay dividends of $1.5 at the end of every year. The tax rate is 35%. What is the best estimate of Despacito's cost of capital? 5.5% 6.96% 7.25% 11.5% Not enough information given to answer. A)