ex-Mex by Rex, Inc. is planning its yearly budget and has the following potential independent proposals:

PROJECTOUTLAYIRR

A$5,000,00011.0%

B$5,000,00018.0%

C$8,000,00016.0%

D$12,000,00010.5%

E$12,000,00012.0%

The firm's capital structure shown below is considered optimal and will be maintained:

Debt$80,000,000

Preferred Stock$20,000,000

Common Equity$100,000,000

The firm has a marginal tax rate of 35% and has $5,000,000 of retained earnings available for investment.Four years ago, Tex-Mex by Rex, Inc. paid a common stock dividend of $3.75 a share.Yesterday, they paid a dividend of $5.00.Assume that this dividend growth rate continues for the indefinite future.The market price for its common stock is $82 with a beta of 1.25.Currently, the YTM on T-Bonds is 2% and the expected market return is 10%. Tex-Mex by Rex, Inc. can raise funds under the following limitations:

BONDS: New 20-year $1000 par value bonds carrying a coupon of 12% (annual) are priced to yield the investor 10% a year.Flotation costs total $70.27 per bond.

PREFERRED STOCK: Current shares of preferred stock have a dividend of $3.50 and are selling for $50 per share.Underwriters charge a flotation fee of 12% of the selling price.

COMMON STOCK: New common stock requires flotation costs equal to 13% of the stock's price.

what is Kd here