Western Electric Utility Company faces increasing needs for capital. Fortunately, it has $40$ percent. Western's treasurer is trying to determine the corporation's current weighte profitability of capital budgeting projects. Historically, the corporation's earnings and di percent annual rate.

Western Electric's common stock is selling at $$64$ per share, and the company will pay $$96$ preferred stock has been yielding $8$ percent in the current market. Flotation costs investment dealer to be $$6\mathrm{.}00$ for preferred stock. The company's optimum capital stru stock, and $25$ percent common equity in the form of retained earnings. Refer to the tabl on bonds of equal risks to Western Electric, maturing in $2038.$

a$.$ Compute the cost of debt, ${}_d.($Input your answer as a percent rounded to $2$ decimal

Cost of debt

b$.$ Compute the cost of preferred stock, $k_n.($Input your answer as a percent rounded to