A company has a target capital structure that consists of 40% debt, 40% common equity, and 20% preferred stock. The prevailing tax rate is 30% as of 2022. The company has railroad projects in which it would like to invest with costs that total P4 Billion. It has earned P1.75 Billion in net income this year with a 60% retention ratio. The company is keen on reinvesting this portion of its earning to the project. The last dividend was P0.50, the current stock price is P5.0, and the growth rate of the company is 10%. If the company raises capital through a new equity issuance, the flotation costs are 12%. The cost of preferred stock is 8% and the after-tax cost of debt is 5%.

1. How much of the railroad project will be funded by debt?

2. What is the percentage of the railroad project to be funded by new issuance of common equity?

3. What is the cost of retained earnings?

4. What is the cost of preferred equity?

5. What is the weighted average cost of capital?