Use this information for the next 2 questions. Consider the following information for Carson Home Contractors, Inc. (In millions, except for per share items)

Financial Statement information:

Sales $1,200

Net income $50

Total Assets $2,000

Shareholders equity $750

Tax rate 40%

Bond issue: 2,500,000 of $1,000 par value 20-year 5% coupon bonds with semiannual payments with a yield to maturity of 8%.

Common stock market price per share $30

10 million shares of $11 per share dividend preferred stock with 8% flotation cost

Market price per share of preferred stock $50

HSB's stock's beta 1.20

Risk free rate 3%

Market risk premium 6.5%

Recent dividend on common stock $2 per share

Expected growth rate in common stock dividends 6%

1. Calculate the percentage of debt in Carson's market value capital structure.

2. Calculate the required return for the preferred stock to be used in the WACC calculation.