A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions.

Target Market Source of Capital Proportions Long$-$term debt $20\%$ Preferred stock $10$ Common stock equity $70$

Debt: The firm can sell a $12-$year, $$1,000$ par value, $7$ percent bond for $$960.$ A flotation cost of

$2$ percent of the face value would be required in addition to the discount of $$40.$

Preferred Stock: The firm has determined it can issue preferred stock at $$75$ per share par value. The stock will pay a $$10$ annual dividend. The cost of issuing and selling the stock is $$3$ per share.

Common Stock: A firm's common stock is currently selling for $$18$ per share. The dividend expected to be paid at the end of the coming year is $$1\mathrm{.}74.$ Its dividend payments have been growing at a constant rate for the last four years. Four years ago, the dividend was $$1\mathrm{.}50.$ It is expected that to sell, a new common stock issue must be underpriced $$1$ per share in floatation costs. Additionally, the firm's marginal tax rate is $40$ percent.