Briggs & Stratton is one of the world's largest manufacturers of gasoline engines for lawn mowers based in Australia. Briggs & Stratton is interested in determining the total cost of capital of its operations. The company falls within the 40% tax bracket. During the investigation, the following data was gathered: Debt: The firm can raise an unlimited amount of debt by selling $1,000-parvalue, 10% coupon interest rate, 10-year bonds on which annual interest payments will be made. To sell the issue, an average discount of $30 per bond must be given. The firm must also pay flotation costs of $20 per bond. Preferred stock: The firm can sell 11% (annual dividend) preferred stock at its $100-per- share par value. The cost of issuing and selling the preferred stock is expected to be $4 per share. An unlimited amount of preferred stock can be sold under these terms. || Common stock: The firm's common stock is currently selling for $80 per share. The firm expects to pay cash dividends of $6 per share next year. The firm's dividends have been growing at an annual rate of 6%, and this rate is expected to continue in the future. The stock will have to be underpriced by $4 per share, and flotation costs are expected to amount to $4 per share. The firm can sell an unlimited amount of new common stock under these terms. Retained earnings: The firm expects to have $225,000 of retained earnings available in the coming year. Once these retained earnings are exhausted, the firm will use new common stock as the form of common stock equity Financing.