ANC Company is considering a few expansion projects that have been proposed by the Finance Manager. You are given the task to develop an estimate of the firm's cost of capital.

Given : - Current outstanding bonds are trading at $1230 with 8% annual payment and 20 years to maturity. The firm estimates the issuance cost for new bonds would be $8 per bond.

- ANC's shares are currently trading at $68 per share. Its last dividend was $6 and dividends are expected to grow at a constant rate of 3% in the foreseeable future. Floatation cost is estimated at $2 per share.

- The current price of the firm's 12%, $100 par value, perpetual preferred share is $108

- The firm's target capital structure is 60% long term debt, 10% preferred share and 30% common share.

- The firm is in the 35% tax bracket.