The Ewing distribution company is planning a 140 million expansion of its chain of discount service stations to several neighboring states. This expansion will be financed, in part, with debt issued with a coupon interest rate of 10%. The bonds have a 10 year maturity and a $1000 face value, and they will be sold sold to net Ewing $970 after issue cost. Ewings marginal rate tax rate is 40%. Preferred stock will cost Ewing 16% after taxes. Ewings common stocks pays a dividend of four dollars per share. The current market price per share is $15, and new shares can be sold to net $14 per share. Ewing's dividends are expected to increase at an annual rate of 5% for the foreseeable future. Ewings expects to have 70 million of retained earnings available to finance expansion. Evenings target capital structure is as follows (see picture)

calculate the weighted cost of capital that is appropriate to use in evaluating this expansion program.

Fining a target capital structure H at fultwit \begin{tabular}{lc} \hline Debt & 40% \\ Preferred stock & 5 \\ Common equity & 55 \\ \hline \end{tabular} Present Value Interest Factor (PVIF) IS1 at i \% per period for n periodst Present Value of an Annuity Interest Factor (PVIFA) (S1 per period at 7 s per period for n periods): fiwing tarset capit al structure is an followst