The firms marginal tax rate is 21%. The market price of todds 7.5 % coupon, semiannual payment, noncallable bonds with 10 years remaining to maturity is $1,250 todd does not use short-term interest-bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost. The current price of the firms perpetual preferred stock (8%, $100 par value, quarterly dividend) is $102.10. todd would incur flotation costs of $3 per share on a new issue. todd common stock is currently selling at $48 per share. Its last dividend (D0) was $2.90, and dividends are expected to grow at a constant rate of 4.5% in the foreseeable future. todd's beta is 1.3, the yield on Treasury bills 2%, and the market risk premium is estimated to be 6.5%. For the bond-yield-plus-risk-premium approach, the firm uses a 3.5% risk premium. Up to $300,000 of new common stock can be sold at a flotation cost of 15%. Above $300,000, the flotation cost would rise to 25%. todd target capital structure is 35 % long-term debt, 5% preferred stock, and 60% common equity. The firm is forecasting retained earnings of $300,000 for the coming year.

**you don't need to use all the inputs

What is todds overall cost of capital (WACC) when retained earnings are used as the equity component?