A.Bad Boys, Inc. is evaluating its cost of capital. Under consultation, Bad Boys, Inc. expects to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a $2.50 per share dividend at $25 a share. The common stock of Bad Boys, Inc. is currently selling for $20.00 a share. Bad Boys, Inc. expects to pay a dividend of $1.50 per share next year. An equity analyst foresees a growth in dividends at a rate of 5% per year. Bad Boys, Inc. marginal tax rate is 35%. If Bad Boys, Inc. raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Bad Boys cost of capital?

B. If Bad Boys, Inc. raises capital using 30% debt, 5% preferred stock, and 65% common stock, given risk-free rate of 4% and market risk premium of 8% and a beta of 1.20 what is Bad Boys new cost of capital? Note the cost of debt and cost of a preferred stay at levels spelled out in part A above.(Use capital asset pricing model to find the cost of equity)

***there are 2 parts to question...had to include all parts of A to get help with part B...not sure how that violates honor code....im hvng issues with the formulas***