A firm has determined its optimal structure which is composed of the following sources and target market value proportions, long-term debt 55% and common stock equity 45%. Debt: The fim can sell a 13-year $1,000 par value, 10 percent bond for $1,040. A flotation cost of 2 percent of the face value would be required. Additionally, the firm has a marginal tax rate of 40 percent. Common Stock: the firm's common stock is currently selling for $85 per share. The fimm expects to pay cash dividends of $4.23 per share next year. The dividends paid on the outstanding stock over the past 6 years (2010-2015) were as follows: Year Dividend The stock must be underpriced by S3 per share, and the flotation costs are expected 2015 3.99 to amount to $2 per share. 2014 3.84 2013 3.70 2012 3.42 Calculate the weighted average cost of capital up to the point when retained 2011 3.12 earnings are exhausted? 2010 2.98