(A) The preferred stock of Jill Industries sells for $40 and pays $3.00 in dividends. The net price of the security after issuance costs is $32.50. Calculate the cost of capital for the preferred stock.

(B) The capital structure for Zone NZ Ltd in given below.

Capital Structure ($000)

Bonds $1083

Preferred Stock 268

Common

Stock 3681

Total 5032.

Zone Ltd plans to maintain the debt structure in the future.

The after cost of debt is 5.5 percent, 13.5 percent is the cost of preferred stock and 18 percent cost of common stock. Evaluate the capital structure of Zone Ltd by calculating the weighted average cost of capital.