Sutton, Inc., is evaluating its cost of capital under alternative financing arrangements. It expects to be able to issue new debt at par with a coupon rate of 8% and to issue new preferred stock with a $2.00 per share dividend at $30 a share. The common stock is currently selling for $25 a share. It expects to pay a dividend of $1.50 per share next year. Sutton expects dividends to grow at a rate of 5% per year and Suttons marginal tax rate is 40%. Consider the following financial arrangement: Debt= 50%,Preferred Stock=25%, Common Stock= 25% calculate the cost of capital for Sutton, Inc.