XYZ is a water retailer. The market price of common stock is $$40,$ its cash dividend $($Do$)$ was $$3\mathrm{.}52,$ and the growth rate is expected to be $5\mathrm{.}5$ percent. Preferred stock has a $$28$ par value with a $4$ percent dividend rate and currently sell for $$30$ per share. Additional forty$-$year debt can be issued at par with a $6$ percent coupon rate. XYZ marginal tax rate is $40\%.$ Currently XYZ has $$500$ million $($market value$)$ of bonds outstanding, $$150$ million $($market value$)$ of preferred stock issued, and $15$ million shares of common stock issued $($par$=$$$18).$ XYZ beta is $1\mathrm{.}3$ and the current market risk premium is seven percent while the T$-$bill return is $4$ percent. The stock over bond premium is $5\mathrm{.}8$ percent. The current capital structure is consider optimal.

A$.$ Find the market weight $($percent$)$ of

$$ Bond$/$debt

$$ Preferred stock

$$ Common stock$/$equity

B$.$ Find the required return for only preferred stock

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