WACC and target weights After careful analysis, Dexter Brothers has determined that its optimal capital structure is composed of the sources and target market alue weights shown in the following table ED The cost of debt is estimated to be 4.79 the cost of preferred stock is estimated to be 10 8% the cost of retained earnings in entimated to be 14.3%, and the cost of new common stock is estimated to be 16.3% All of these are after-tax rates. The company's debt represente 16%, the preferred stock represents 796, and the common stock equity represents 78% 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 available and does not expect to sell any new common stock Calculate the weighted average cost capital on the basis of historical market value weighila b. Calculate the weighted average cost capital on the basis of farvel market value weighie. Compare the angwere obtained in parts a and b. Explain the differences The weighted average cost of capital on the basis of historical market value weight is 26 (Round to two decimal places) Data table x (Click on the icon here in order to copy the contents of the data table below into a apreadsheet Target market value weight 20% 12 68 Source of capital Long term debt Preferred stock Common stock equity Total 2 100 % Print Done