The following information is available about ACME Inc. Balance Sheet: LT 10% Coupon Bonds (10,000 bonds) $10,000,000 Preferred Stock (40,000 shares) ($50 par with a 10% dividend) 2,000,000 Common Stock (1,000,000 shares) 20,000,000 The market values are $1060 for each $1000 par value bond, $53 for each share of preferred, and $41.25 for each share of common. The bonds are recorded on the balance sheet at their par value and mature in 10 years. Chapter 10 -Marginal Cost of Capital 173 Beta 1.3 Current Treasury bond rate 6% Risk Premium for stocks over bonds 5% Tax Rate 40% Growth rate in dividends 10% Expected market return 13% Dividend (D0) 2.25 5a. What are the appropriate weights for the opportunity cost of capital? 5b. What are the appropriate costs of debt, preferred, and common (use an average of the 3 methods for common)? 5c. What is the marginal cost of capital?