Problem 5 (10%) Examine the BOOK VALUE CAPITAL STRUCTURE for River Rocks below. Liabilities and Net Worth Bonds, coupon = 7%, paid annually (Par S1000, maturity - 10 years, current yield to maturity - 8%) $10,000,000 Preferred stock (100,000 shares) $ 2,000,000 Common stock (I million shares) S 100.000 1. The preferred stock currently sells for $15 per share and the common stock for $20 per share. What is the capital structure of the firm on the basis of market values? b. If the preferred stock pays a dividend of $2 per share the beta of the common stock is 0.9, the market risk premium is 10%, the risk free rate is 5%, and the firm's tax rate is 35%, what is River Rocks's weighted average cost of capital