WACC and target weights Alter caretut 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 e The cost of debt is estimated to be 4.7%, the cost of preferred stock estimated to be 11.45 the cost of retained angs is estimated to be 149%, and the cost of new common stock is estimated to be 16.9% All of these are after-tax rates. The company's debt represents 20%, the preferred stock represents 7%, and the common stock equity represents 73% of total capital on the bass 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 now common stock a. Calculate the weighted average cost of capital on the basis of historical market valon weights b. Calculate the weighted average cost of capital on the basis of target market value weights c. Compare the answers obtained in parts a and b. Explain the differences a. The weighted average cost of capital on the basis of historical market value weghts as I Round to two decimal places)