Source of Capital Long-term debt Common stock equity Target Market Proportions 60% 40 Debt: The firm can sell a 15-year. $1,000 par value, 8 percent bond for $1.050. A flotation cost of 2 percent of the face value would be required in addition to the premium of $50. Common Stock Afirm's common stock is currently selling for $75 per share. The dividend expected to be paid at the beginning of next year is $5. Its dividend payments have been growing at a constant rate for the last five years. Two years ago, the dividend was $3.10. Underwriters think this will be a hot IPO and it can be sold at a premium of $10 per share and the firm must pay $1 per share in flotation costs. Additionally, the firm has a marginal tax rate of 40 percent The firm's cost of a new issue of common stock is 23.2% 24.3% O 20.2% 26.7%