Gross, Ltd. has the following capital structure: Debt 0.30, Preferred Stock, 0.35 Common Equity 0.40

a) The after-tax cost of debt is 5.5%, the cost of preferred stock is 7%, and the cost of common equity (in the form of retained earnings) is 18%. The cost of new common is 20%. Assuming the firms common equity consists of retained earnings, find the weighted average cost of capital. b) The firm currently has $534,000 in retained earnings. At what dollar value of total financing in the capital structure will the firm run out of retained earnings? c) Find the marginal cost of capital after the firm has run out of retained earnings and issued new common.