During the last few years, Coleman Technologies has been too constrained by the high cost of capital to make many capital investments. Recently, though, money costs have been declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department. Assume that you are an assistant to Jerry Lehman, the financial vice-president. Lehman has provided you with the 3. following data, which he believes may be relevant to your task: a. The firm's tax rate is 40 percent. b. The current price of Coleman's 12 percent coupon, semiannual payment, non- callable bonds with 15 years remaining to maturity is $1,153.72. Coleman does not use short-term interest-bearing debt on a permanent basis. The YTM is 10 percent. New bonds would be privately placed with no flotation costs. c. The current price of the firm's 10 percent, $100 par value perpetual preferred stock is $113.10. Coleman would incur flotation costs of 2 percent on a new issue. d. Coleman's common stock is currently selling at $50 per share. Its last dividend (Do) was $4.19, and dividends are expected to grow at a constant rate of 5 percent in the foreseeable future. Coleman's beta is 1.2; the yield on Treasury bonds is 7 percent; and the market risk premium is estimated to be 6 percent. e. Common stock can be sold at a flotation cost of 15 percent. f. Coleman's target capital structure is 30 percent long-term debt, 10 percent preferred stock, and 60 percent common equity. g. The expected cash flows are $1,000,000 up front costs and then a perpetuity of $150,000. Should they accept the proposal