A$-$Rod Manufacturing Company is trying to calculate its cost of capital for use in making a capital budgeting decision. Mr$.$ Jeter, the vice

president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.

The company currently has outstanding a bond with a $10\mathrm{.}8$ percent coupon rate and another bond with an $8\mathrm{.}4$ percent rate. The firm

has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yield $11\mathrm{.}7$ percent. The

common stock has a price of $$62$ and an expected dividend $(D_1)$ of $$1\mathrm{.}82$ per share. The historical growth pattern $(g)$ for dividends

is as follows:

$$1\mathrm{.}37$

$1\mathrm{.}51$

$1\mathrm{.}66$

$1\mathrm{.}82$

The preferred stock is selling at $$82$ per share and pays a dividend of $$7\mathrm{.}80$ per share. The corporate tax rate is $30$ percent. The

flotation cost is $20$ percent of the selling price for preferred stock. The optimum capital structure for the firm is $30$ percent debt, $10$

percent preferred stock, and $60$ percent common equity in the form of retained earnings.

Compute the average historical growth rate.

Note: Do not round Intermedlate colculatlons. Round your answer to the nearest whole percent and use thls value os g$.$ Input

your onswer as a whole percent.

b$.$ Compute the cost of capital for the individual components in the capital structure.

Note: Use the rounded whole percent computed In port a for $g.$ Do not round any other Intermedlate calculatlons. Input your

answers as a percent rounded to $2$ declmal ploces.

c$.$ Calculate the weighted cost of each source of capital and the weighted average cost of capital.

Note: Do not round Intermedlate coleulations. Input your answers as a percent rounded to $2$ declmal places.