You have been assigned to calculate the Weighted-Average-Cost-of-Capital for your firm, which has two sources of long-te

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You have been assigned to calculate the
Weighted-Average-Cost-of-Capital for your firm, which has two
sources of long-term capital. The company’s marginal tax rate is
28%.
First, there are 6,500,000 shares of common stock, which are
currently selling for $153.12. Recently, the firm announced EPS of
$12.64. You feel that it is reasonable to assume that earnings will
grow at 1.65% into the future.
Second, there are 6,000,000 shares of preferred stock
outstanding that pay a perpetual (annual) dividend of $3.85, and
are currently selling for $52.04.
Third, there is an issue of 460,000 coupon bonds with a face
value of $1,000, which pays 6.35% (annual) coupons, and mature in
twenty-three years. These bonds are currently trading for
$1,182.10.
Estimate the implied return on the preferred stocks. (The answer
is a percent, round your answer to two decimal places, e.g.
4.75)