X Company wants to raise P20,000,000 to expand its portfolio of second mortgages and substandard auto loans. Bank financing agreements limit X Company to a maximum of 75% debt. They can borrow money at 13%, and they are in the 30% tax bracket. New retained earnings are P300,000. X Company can privately place P1,000,000 of preferred stock at 12%, and preferred floatation costs are 8.5%. Their current stock price is P15; dividends are P0.85, and have been growing at 22% per year; and flotation costs are P3 per share. Compute the weighted average cost of capital considering the following strategy.

a. What is the weighted average cost of new capital using only new retained earnings (25%) and debt (75%)?b. What is the weighted average cost of new capital from the preferred stock offering with a blend of 30% preferred and 70% debt?c. What is the weighted average cost of new capital maintaining a mix of 35% newly issued common stock and 65% debt?