What is the weighted average cost of capital for Foggy Futures Weather Forecasters? The firm is in the 30% tax bracket. The optimal capital structure is listed below: Source of Capital Weight Long-Term Debt 30% Preferred Stock 10% Common Stock 60% Debt: The firm can issue $1,000 par value, 8% coupon interest bonds with a 20-year maturity date. The bond pays coupons payments semi-annually. The bond is selling at $1,085 and flotation costs of $20 per bond. Preferred Stock: The firm can sell preferred stock with a dividend that is 7% of the current price. The stock costs $110. The cost of issuing and selling the stock is expected to be $6 per share. Common Stock: The firms common stock is currently selling for $70 per share. The firm expects to pay cash dividends of $5 per share next year. The dividends have been growing at 6.5%. The stock must be discounted by $7, and flotation costs are expected to amount to $5 per share. Retained Earnings: The firm expects to have enough retained earnings in the coming year to be used in place of any new stock being issued.