Here is the condensed $2021$ balance sheet for Skye Computer Company $($in thousands of dollars$)$:

$2021$

Current assets $ $2,000$

Net fixed assets $3,000$

Total assets $ $5,000$

Accounts payable and accruals $ $700$

Short$-$term debt $200$

Long$-$term debt $1,650$

Preferred stock $(10,000$ shares$)250$

Common stock $(40,000$ shares$)1,075$

Retained earnings $1,125$

Total common equity $ $2,200$

Total liabilities and equity $ $5,000$

Skye's earnings per share last year were $$3\mathrm{.}50.$ The common stock sells for $$60\mathrm{.}00,$ last year's dividend $($D$0)$ was $$2\mathrm{.}80,$ and a flotation cost of $9\%$ would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of $9\%.$ Skye's preferred stock pays a dividend of $$3\mathrm{.}60$ per share, and its preferred stock sells for $$30\mathrm{.}00$ per share. The firm's before$-$tax cost of debt is $8\%,$ and its marginal tax rate is $25\%.$ The firm's currently outstanding $8\%$ annual coupon rate, long$-$term debt sells at par value. The market risk premium is $4\%,$ the risk$-$free rate is $5\%,$ and Skye's beta is $1\mathrm{.}496.$ The firm's total debt, which is the sum of the company's short$-$term debt and long$-$term debt, equals $$1\mathrm{.}85$ million.