Problem $11-24($Algo$)$ Changes in costs and weighted average cost of capital $[$LO$11-1]$

Brook's Window Shields Incorporated is trying to calculate its cost of capital for use in a capital budgeting decision. Mr$.$ Glass, the vice president of finance, has given you the following information and has asked you to compute the weighted average cost of capital.

The company currently has outstanding a bond with a $92$ percent coupon rate and another bond with a $6\mathrm{.}5$ percent coupon rate. The firm has been informed by its investment banker that bonds of equal risk and credit rating are now selling to yleld $10\mathrm{.}4$ percent.

The common stock has a price of $$52$ and an expected dividend $(D_1)$ of $$470$ per share. The firm's historical growth rate of earnings and dividends per share has been $6\mathrm{.}5$ percent, but security analysts on Wall Street expect this growth to slow to $4$ percent in future years.

The preferred stock is selling at $$48$ per share and carries a dividend of $$375$ per share. The corporate tax rate is $35$ percent. The flotation cost is $2\mathrm{.}6$ percent of the selling price for preferred stock. The optimum capital structure is $25$ percent debt, $15$ percent preferred stock, and $60$ percent common equity in the form of retained earnings.

a$.$ Compute the cost of capital for the individual components in the capital structure.

Note: Do not round Intermedlate calculations. Input your answers as a percent rounded to $2$ decimal places.

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