Given the following information, calculate the WACC for Puppet Corporation.
Percent of capital structure:
Debt	55%
Preferred stock	5
Common equity	40
Additional information:
Bond coupon rate	8.50%
Bond yield	7%
Bond flotation cost	2%
Dividend, expected common	$1.50
Price, common	$30.00
Dividend, preferred	5%
Flotation cost, preferred	3%
Flotation cost, common	4%
Corporate growth rate	6%
Corporate tax rate	35%
a) Calculate the cost of capital assuming use of internally generated funds.
b) Calculate the cost of capital assuming use of externally generated funds.
c) Why is there a difference? Why does only common equity change?