WACC and target weight her careful analysis. Dexter Brothers has determined that is optimal capital structure is composed of the sources and target market value weights shown in the following table: The cost of debt is estimated to be the cost of preferred stock is estimated to be 11.5%, the cost of retained coming is estimated to be 15%, and the cost of new common stock is estimated to be 17%. All of these are her tax rates. The company's debt represents 10%, the preferred to represents and the common stock qully representa 73% of total capital on the basis of the market values of the three components. The company expects to have a significant amount of retained earnings valable and does not expect to sell any woon ook . Caleate the weed average cost leptal on the basis of market value weights b. Caleate the weighted average cool pillon the basis of topel martes . Compare the wested in and the differences . The wind were cost of all on the basis of historical market value in Round to two decimale The weighted average cost of capital on the basis of target market value wigs . Round to two decimal places) c. Corpure the stained in parts and explain the offerences (elect the best wel below) A Using historical weight, the firm has a higher cost of capital due to the weighing of the more expensive common stock componert, 73%, versus the target weight of 60% OB. Using historical weighs, the firm has a higher cost of capital because historical costs are che higher than future expected costs OC. Using horical weight, the firm has a lower cont of capital due to the weighing of the more expensive common stock component, 73, versus the target weight of 63% OD. Using historical ways, the firm has a lower cost of capital because historical cols are often lower than future expected costs et market value weights. rences ket va Data Table value nces (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) ne to caus to thi Source of capital Long-term debt Preferred stock Common stock equity Total Target market value weight 24% 13 63 100 % ause Print Done