Question 2 Burton Manufacturing is interested in measuring its overall cost of capital. The firm is in the 40% tax bracket. Current investigation has gathered the following data: Debt - The firm can raise an unlimited amount of debt by selling RM 1000 par value, 10% coupon interest rate, 10-year bonds on which annual interest payments will be made. To sell the issue, a discount of RM 30 per bond must be given. The firm must also pay flotation costs of RM 20 per bond. Preferred stock - The firm can sell 11% (annual dividend) preferred stock at its RM 100 per share par value. The cost of issuing and selling the preferred stock is expected to be RM 4 per share. Common stock - The firm's common stock is currently selling for RM 80 per share. The firm expects to pay cash dividends of RM 6 per share next year. The firm's dividends have been growing at an annual rate of 6%, and this rate is expected to continue in the future. The stock will have to be underpriced by RM 4 per share, and flotation costs are expected to amount to RM 4 per share. Determine the specific cost of each source of financing for Burton Manufacturing. (13m)