We know that cost of capital is a mix of common shares, preferred shares, and borrowing from the banks. We assume that cost of capital is 10%. The cost of common shares is 7%, debt is 15%, and preferred shares is 8%. If the firm borrows more funds from the bank then what would be the impact on the cost of equity, cost of debt, and overall cost of capital. It is important to note that borrowing cost remains the same (that is 15 percent).