Compute ABC Company's cost of capital based on the following information: Risk free rate: 2% Tax rate: 40% Effective interest of debt: 15% Market rate of return: 12% Beta: 1.6 FMV of preferred stock $500,000 Balance Sheet Current Assets Current Liabilities $100,000 Cash $70,000 Account Receivable 50,000 Noncurrent Liabilities 200,000 Inventory 80,000 Common Stock 200,000 Total Current Assets 200,000 Preferred stock 10,000 Par $10 (Dividend $6 declared 100,000 and paid) Total Noncurrent Assets 500,000 Retained Earnings 100,000 Total Assets 700,000 Total Shareholder 70,000 Equity and Liabilities (Hint You should use the formula that is dividend paid divided by FMV of preferred stock) Please fill in the answer column Requirements Answer % or amount) CAPM market risk premium b. CAPM cost of common stock C. Cost of preferred stock d. Cost of debt (after tax) Cost of retained earnings f. Weighted average cost of capital 9. Amount of total capital structure a. e