P14-27 (similar to) Question Help DOC HW (Weighted average cost of capital) As a member of the Finance Department of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant. Under the assumption that the firm's present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the fim's capital structure as follows: To finance the purchase, Ranch Manufacturing will soll 10-year bonds paying interest at a rate of 66 percent per year (with semiannual payment) of the market price of $1,036 Preferred stock paying a 52 07 dividend can be sold for $25 77. Common stock for Ranch Manufacturing is currently selling for $54,04 per share and the firm paid $2.94 dividend last year. Dividends are expected to continue growing at a rate of 40 percent per year into the indefinite future. If the firm's tax rate is 30 percent, what discount rate should you use to evaluate the equipment purchase? The weight of preferred stock in the firm's capital structure is 16,81% (Round to two de Data Table The weight of common stock in the firm's capital structure is 50,45 %. (Round to two de b. Calculate component costs of capital Source of Capital Market Values The aner-tax cost of debt for the firm 4.28% (Round to two decimal places) Bonds 53.600.000 Preferred stock $1,800,000 The cost of preferred stock for the firm is 8.03% (Round to two decimal places) Common stock $5.500.000 The cost of common equity for the firm is 1061 % (Round to two decimal places) Print Done c. Calculate the firm's weighted average cost of capital The discount rate you should use to evaluate the equipment purchase is (Round der Merwe rok