TRM Consulting Services currently has the following capital structure: Source Common Stock Preferred Stock Debt Book ValueQntity 25,000,000 1,250,000 100,000 8,600 5,000,000 8,600,000 New debt would mature on June 30, 2040, have a coupon rate or 8%, and would be sold for their par value of $1,000. The bonds pay interest semiannually, and flotation costs would be 2% of the selling price. The bonds would be issued on June 30, 2015. The preferred stock pays a $7 dividend annually and is currently valued at $67.50per share. Flotation costs on new preferred equity would be 4% of the price. The common stock, which can be bought for $28.00, has experienced a 6% annual growth rate in dividends and is expected to pay a $160 dividend next year, Flotation costs on new common equity would be 8% The stock has a beta of 1.25, the risk-free rate is 3%, and the expected market risk premium is 7%. i In addition, the firm expects to generate $150,000 of retained earnings. Assume that TRM's marginal tax rate is 35%. nally, the yield on the bonds is 8.18%. d: Calculate the book-value weights for each source of capital. Calculate the market-value weights for each source of capital. Calculate the WACC using both the market value weights and the book value weights with retained earnings and with new common equity. What is the third set of weights that could have been used in this evaluation? Why do some think this the superior set of weights to use