Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Line up the calculations in the order shown in Table 11-1.

Percent of capital structure:

Preferred stock................ 20%

Common equity............... 40

Debt................................. 40

Additional information:

Corporate tax rate............................. 34%

Dividend, preferred........................... $8.50

Dividend, expected common............. $2.50

Dividend, preferred........................... $105.00

Growth rate....................................... 7%

Bond yield.......................................... 9.5

Flotation cost, preferred.................... $3.60

Price, common................................... $75.00