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Loyola Corporation has a target capital structure of 25% bond financing, 20% preferred stock financing, and 55% common equity financing. Loyola forecasts it will retain

Loyola Corporation has a target capital structure of 25% bond financing, 20% preferred stock financing, and 55% common equity financing. Loyola forecasts it will retain $1,000,000 of new earnings in the coming year. Where is the break in Loyola's cost of capital schedule?

a.

$ 5,000,000

b.

$ 1,818182

c.

$ 4,000,000

d.

$ 1,000,000

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