4. Dozen Monkeys A Dozen Monkeys Ltd. has the following righthand side of its balance sheet: Debt: 8% coupon, 12 years to maturity .................. $ 8,000,000 Preferred shares: 5% dividend ............................. 1,000,000 Common shares: 750,000 outstanding ................... 1,500,000 Retained earnings ........................................... 4 500 000 $15,000,000 New debt could be issued to yield 10 percent, with oatation costs netting the firm $970 on each $1,000 bond. Preferred shares would require a current yield of 8 percent, with aftertax oatation costs of 4 percent. Common shares currently trade at $15.00, but new shares would be discounted to $14.25 to encourage sales. Aftertax oatation costs on new common shares would be 5 percent. The anticipated dividend growth rate is 6 percent. The expected dividend this year is $1.50. A Dozen Monkeys Ltd. has a 40 percent tax rate and would require new share capital to fluid new investments. Based on market value weightings, calculate Monkey's weighted average cost of capital