Given the following information, calculate the weighted average cost of capital for Puppet Corporation.(Round intermediate calculations to2 decimal places. Round thefinal answers to2 decimal places.)

Percent of capital structure:

Debt55%

Preferred stock 5%

Common equity 40%

Additional information:

Bond coupon rate 8.5%

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.