Parrot manufactures drones (Parrot) and requires $165 million to fund a new manufacturing facility. Parrot will finance the project in a pattern similar to it's current financing. The firm's common stock is selling in the market at $320 per share; the market is believed to be in equilibrium. Common stock dividends of $2.25 per share were recently paid (Do). The market is currently requiring a 5 percent premium and Tbonds are currently yielding 1.5%. Preferred stock is selling in the market at $88 per share. The preferred has a dividend rate of 6.75% percent on $115 face value per share. Parrot's current bonds are ten year, $1000 par bonds with a coupon rate of 9% and are selling at a price of $1150 per bond. Interest is paid semi-annually on the bonds. The firm faces a 25 percent marginal tax rate and the project asset beta is estimated at 1.18. Parrot's balance sheet, in part, is presented below.
Parrot Partial Balance Sheet ($ )
Accounts Payable	$157,000,000	Pfd Stock	$15,000,000
Accruals	84,000,000	Common stock @ par ($10 par)	8,550,000
LT Debt ($1000 par)	165,000,000	Paid-In-Capital	85,000,000
Total Debt	$406,000,000	Retained Earnings	118,000,000
		Total Liab. & Eq.	$632,550,000
Determine the weights of debt, preferred stock and common equity to be used in financing the project.
Wd =	9%
Wp =	7%
We =	5%
What is the cost of debt (Rd) financing to the firm?
Rd =
Estimate the cost of preferred stock (Rp)
Rp =
Estimate the cost of equity(Re)
Re =
Determine the cost of capital:			In answering this part, make sure to a table with all of the components.
WACC =			Include the components of each Req'd return as shown in class examples and partially
			in the table associated with text Example 13.5