Heavy Metal Corp. is a steel manufacturer that finances its operations with 40 percent debt, 10 percent preferred stock, and 50 percent equity. Its net income is $100 million and it has a payout ratio of 35 percent. The interest rate on the company's debt is 11 percent. The preferred stock pays an annual dividend of $2 and sells for $20 a share. The company's common stock trades at $30 a share and its current dividend (D0) of $2 a share is expected to grow at a constant rate of 8 percent per year. The flotation cost of external equity is 15 percent of the dollar amount issued, while the flotation cost on preferred stock is 10 percent. The company