15. (Cost of capital schedule-one break point) A com- pany plans to raise new capital as follows: Cost Proportion Bonds payable 9.0% 35% Preferred stock 15.5 15 Common stock (retained earnings) 17.5 50 Total Liabilities + Equity 100% The firm forecasts it can retain $1 million of new earn- ings. If it requires additional common equity, it will sell a new issue of common stock at a cost of 18.5%. a. Calculate the company's WACC using new re- tained earnings as the equity source. b. Locate the break point in the cost of capital sched- ule due to running out of new retained earnings. c. Calculate the company's WACC after it substitutes the new stock issue for retained earnings. d. Draw the cost of capital schedule