Basic cost of capital equation

Taylor Company has a target capital structure that consists of $2.1 million of debt capital, $3.5 million of preferred stock financing, and $3.2 million of common equity. The corresponding weights of its debt, preferred stock, and common equity financing that should be used to compute its weighted cost of capital (rounded to the nearest wo decimal places) are: O 23.86%, 39.77%, and 36.36%, respectively 0 36.36% 23.86%, and 39.77%, respectively 39.77%, 36.36%, and 23.86%, respectively 23.86%, 36,36%, and 19.77%, respectively Consider the following case: Morgan Limited, a key competitor of Taylor Company in the computer technology field, has a capital structure consisting of 35% debt, 10% preferred stock, and 55% common equity. Concerned that its cost of capital may put it at a competitive disadvantage vis-a-vis the Taylor Company, a Morgan analyst hos been tasked with computing and comparing the weighted costs of capital of both companies As the Morgan analyst, and through your dogged research, you've collected the following capital structure and component cost data for both companies. (Remember, you don't have access to confidential financial information for Taylor Company, so you've had to rely on balance sheet dota collected from their published financial statements.) Complete the following table by computing each company's weighted cost of capital (rounded to your decimal places) and answer the related question that follows: Financial Data Morgan Limited Data Taylor Company Data 30% Debt Weight (wa) Cost (ka) Preferred stock 35% 5.50% 6.00% 10% 5% 7.00% 8.15% Weight (p) Cost (ko) Common equity Weight (w.) Cost (ke) Tax rate (T) Weighted cost of capital (K) 55% 65% 8.75% 11.75% 40% 35% If a firm's weighted cost of capital represents the overall or summary indicator of the market's perception of a firm's riskiness (across its different sources of financing), then which company currently appears to exhibit the greater risk? Morgan Limited Taylor Company