Source Debt Preferred Common Totals Price Units Total Market Value 361,812 100,000 700,000 1,161,812 % of Total Marginal After Tax Cot $ 904.53 100.00 70.00 400 $ 31.14% 8.61% 60.25% 100.00% 1,000 10,000 Additional Bond Data Tax Rate Coupon Rate Face Value 40% 10% $1,000.00 10 3% Under the required return tab w caluclated the current os of each of the forms of capital structure. For instance it does not matter the rate at which a bond was originally issued What is important is the current require rate of return on that bond, or the current required return or preffered and common stock. However the WACC changes as we have to issue new forms of capital. As the text discusses with new stock or bond isseus we must factor in flotation costs. Using the information to the left to calculate the marginal WACC. Flotation Cost Additional Preferred Data Dividend Flotation Cost $ 10.00 5% Additional Common Data Dividend 0 3.96 Growth Rate Flotation Cost 0% 690