A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions: \begin{tabular}{lc} & Target Market \\ Source of Capital & Proportions \\ \hline Long-Term Debt & 30% \\ Preferred Stock & 5% \\ Common Stock Equity & 65% \end{tabular} Debt: The firm can sell a 20 -year, $1,000 par value, 9 percent bond for $980. A flotation cost of 2 percent of the face value would be required in addition to the discount of $20. Preferred Stock: The firm has determined it can issue preferred stock at $65 per share par value. The stock will pay an $8.00 annual dividend. The cost of issuing and selling the stock is $3 per share. to sell, a new common stock issue must be underpriced at $1 per share and the firm must pay $1 per share in flotation costs. Additionally, the firm's marginal tax rate is 40 percent. Calculate the firm's weighted average cost of capital assuming the firm has exhausted all retained earnings. Edit View Insert Format Tools Table