Using 14% as the cost of common equity calculate the wacc.

• Firm calculating cost of capital for major expansion program.

• Tax rate = 40%.

• 15-year, 12% coupon, semiannual payment noncallable bonds sell for $1,153.72. New bonds will be privately placed with no flotation cost.

• 10%, $100 par value, quarterly dividend, perpetual preferred stock sells for $111.10.

• Target capital structure: 30% debt, 10% preferred, 60% common equity.