36. . 36. ABC Inc. is interested in measuring its overall cost of capital and has gathered the following data. Under the terms described below, the company can sell unlimited amounts of all instruments. ABC can raise cash by selling P1,000, 8% 20-year bonds with annual interest payments. In selling the issue, an average premium of P30 per bond would be received, and the firm must pay flotation cost of P30 per bond. The after-tax cost of funds is estimated to be 4.8%. ABC can sell 8% preferred stock par P100 at P105 per share. The cost of issuing and selling the preferred stock is expected to be P5 per share. ABC's common stock is currently selling for P100 per share. The firm expects to pay cash dividends of P7 per share next year, and the dividends are expected to remain constant. The stock will have to be underpriced by P3 per share, and flotation cost are expected to amount to P5 per share. ABC expects to have available P100,000 of retained earnings in the coming year; once these retained earnings are exhausted, the firm use new common stock as the form of common stock equity financing ABC's target capital structure is Long-term debt Preferred stock Common stock 50% If ABC, Inc. needs a total of P1,000,000, the firms weighted average cost of capital would be O a. 6.8% 30% 20% b. 6.5% O c.6.33% O d.7.2%