An investment amount of $10M has to be raised through equity financing and debt financing. The required debt ratio is 0.45 and the company tax rate is 35%. a) The current market price of the companys common stock is $50 and the current dividend is $5 and the dividend is expected to grow at 5% annual rate. The floating cost of issuing a common stock is 10%. Preferred stocks of $100 par value with 10% fixed annual dividend can also be issued at 8% floating cost. If the required proportion of funds from retained earnings to common stocks to preferred stocks are 0.4:0.15:0.45 respectively, what is the cost of equity?

b) Bank loans at 12% annual interest. Also, the company issues 20-year bonds that pay the equivalent of 9% yield to maturity. If the required ratio of funds raised through these two methods of debt financing is 0.7:0.3 what is the cost of debt?

c) From (a) and (b), what is the cost of capital (WACC)?