Pacific Intermountain Utilities Company has a present capital structure (which the company feels is optimal) of 30 perce

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Pacific Intermountain Utilities Company has a present capitalstructure (which the company feels is optimal) of 30 percentlong-term debt, 8 percent preferred stock, and 62 percent commonequity. For the coming year, the company has determined that itsoptimal capital budget can be externally financed with $55 millionof 14 percent first-mortgage bonds sold at par and $20 million ofpreferred stock costing the company 15 percent. The remainder ofthe capital budget will be financed with retained earnings. Thecompany’s common stock is presently selling at $15 a share, andnext year’s common dividend, D1, is expected to be $2 a share. Thecompany has 22 million common shares outstanding. Next year’s netincome available to common stock (including net income from nextyear’s capital budget) is expected to be $90 million. The company’spast annual growth rate in dividends and earnings has been 7percent. However, a 4 percent annual growth in earnings anddividends is expected for the foreseeable future. The company’smarginal tax rate is 40 percent. Round your answer to two decimalplaces. 10.12% would be shown as 10.12.
What is the cost of equity? %
What is the WACC? %