Given the following information, calculate the weighted average cost of capital for Puppet Corporation. (Round intermediate calculations to 2 decimal places. Round the final answers to 2 decimal places.)

Percent of capital structure:

Debt

25%

Preferred stock

70

Common equity

5

Additional information:

Bond coupon rate

8.5%

Bond yield

8.50%

Bond flotation cost

2%

Dividend, expected common

$1.50

Price, common

$30.00

Dividend, preferred

5%

Flotation cost, preferred

3%

Flotation cost, common

4.00%

Corporate growth rate

6%

Corporate tax rate

35%

a. Calculate the cost of capital assuming use of internally generated funds.

Internal capital cost %

b. Calculate the cost of capital assuming use of externally generated funds.

External capital cost %

c. Not suitable for Connect