The Longenes Company uses a target capital structure when calculating the cost of capital. The target structure and current component costs based on market conditions follow. Component mix Cost Debt 25% 8% Preferred stock 10 12 Common equity 65 20 The firm expects to earn 20 million next year and plans to invest $18 million in the new capital projects. It generally pays dividends equal to 60% of earning. Flotation costs are 10% for common and preferred stock. a) What is longene initial WACC