Wealth Drilling Management is evaluating an opportunity to take on a project in the oil and gas industry in Dubai. To properly assess the opportunity, the company must calculate its cost of capital The following is the existing capital structure based on the book value: Debentures Preferred Shares Common Shares Retained Earnings TOTAL $12,000,000 5,000,000 10,000,000 15,000,000 $ 42,000,000 The debentures have a coupon rate of 11% and were issued 20 years ago with 15 years left to maturity. Current market yields on a security of this risk level are 8%. Flotation costs would be 2.5% of the issue price. The preferred shares have a fixed dividend rate of 9%, were issued at $40 per share and currently trade at 545 per share. A new issue would require a flotation cost of 4%. Wealth Drilling Management is evaluating an opportunity to take on a project in the oil and gas industry in Dubai. To properly assess the opportunity, the company must calculate its cost of capital The following is the existing capital structure based on the book value: Debentures Preferred Shares Common Shares Retained Earnings TOTAL $12,000,000 5,000,000 10,000,000 15,000,000 $ 42,000,000 The debentures have a coupon rate of 11% and were issued 20 years ago with 15 years left to maturity. Current market yields on a security of this risk level are 8%. Flotation costs would be 2.5% of the issue price. The preferred shares have a fixed dividend rate of 9%, were issued at $40 per share and currently trade at 545 per share. A new issue would require a flotation cost of 4%