You are employed by Lowell Inc. Your boss has asked you to estimate the weighted average cost of capital for the company. Following are balance sheets and some information about the company.

Assets

Current assets $$30,000,000$

Net plant, property, and equipment $$100,000,000$

Total Assets $$130,000,000$

Liabilities and Equity

Accounts payable $$10,000,000$

Accruals $$10,000,000$

Current liabilities $$20,000,000$

Long term debt $(40,000$ bonds, $$1,000$ face value$)$ $$40,000,000$

Total liabilities $$60,000,000$

Preferred Stock $(100,000$ shares, $$100$ face value$)$ $$10,000,000$

Common Stock $(10,000,000$ shares$)$ $$30,000,000$

Retained Earnings $$30,000,000$

Total shareholders equity $$70,000,000$

Total liabilities and shareholders equity $$130,000,000$

You check The Wall Street Journal and see that Lowell stock is currently selling for $$8\mathrm{.}00$ per share and that Lowell bonds are selling for $$952$ per bond. These bonds have a $8$ percent coupon rate, with semi$-$annual payments. The bonds mature in twelve years. The preferred stock has an unlimited life and pays an $6$ percent annual coupon. The preferred stock sells for $$89.$ The beta for your company is approximately equal to $2.$ The risk free rate is $5\mathrm{.}0$ percent and the mrket risk premium is also $4$ percent. Lowell is in the $21$ percent tax bracket.

WHAT IS THE FIRM'S COST OF COMMON STOCK, Ks$?$

$13\%$

$14\%$

$15\%$

$16\%$

$20\%$