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The company curremty has outstanding a bond with a 6.2 percent coupon tate and another bond with a 3.2 percent coupon rate the firm has

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The company curremty has outstanding a bond with a 6.2 percent coupon tate and another bond with a 3.2 percent coupon rate the firm has been informed by its investment banker that bonds of equal nisk and credit rating are now seling fo yeld 72 percent. The common stock has a price of $62 and an expected dividend (D1) of $3.30 per share. The firm's historical growat rate of earriings and dividends per share has been 11.5 percent, but security analysts on Wall Street expect this growth to slow to 9 percent in future: years. The preferred stock is selling at $58 per share and carries a dividend of $975 per share. The corporate tax rate is 30 percent. The flotation cost is 1.9 percent of the seiling price for preferred stock. The optimum capital structure is 50 percent debt, 5 percent preferred stock, and 45 percent comimon equity in the form of retained earnings. a. Compute the cost of capital for the individual components in the capital structure. Note: Do not round intermediote calculations. Input your onswers as a percent rounded to 2 decimal places. b. Calculate the weighted cost of each source of capital and the weighted overage cost of capital. Note: Do not round intermediate calculations. Input your onswers os a percent rounded to 2 decimat places

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