22. Given the following information:

Percent of capital structure:

Preferred stock	20	%
Common equity (retained earnings)	35
Debt	45

Additional information:

Corporate tax rate		40	%
Dividend, preferred	$	5.00
Dividend, expected common	$	2.50
Price, preferred	$	97.00
Growth rate		3	%
Bond yield		12	%
Flotation cost, preferred	$	9.20
Price, common	$	79.00

Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Notice that this problem asks for the weighted costs. These are the unweighted costs times the weights. Like this: (kd)(wd) = weighted cost of debt.

Weighted Cost

Debt _____________________ %

Preferred stock ___________________

Common equity (retained earnings) _____________

Weighted average cost of capital _______________%