Marginal corporate tax rate: 25%

Bonds with $1,000 face value with a 6% coupon rate

with semi-annual payments matures in 10 years now sells for $928.94

Preferred stock dividend $5.50

Preferred stock price $55.00

Current common stock dividend per share $1.50

Price per share of common stock $12.00

Floatation cost to sell new common stock 10%

Forecast rate of growth for corporation 4%

Risk free interest rate 4%

Market rate of return 12%

Beta for firm 1.4

Long-term debt $30,000

Preferred stock 10,000

Retained Earnings 30,000

Common Stock 40,000

$100,000

1. What is the weighted average cost of capital using the dividend growth model?