IBM is evaluating its cost of capital under alternative financing arrangements. In consultation with investment bankers,

[answerhappygod]

IBM is evaluating its cost of capital under alternative
financing arrangements. In consultation with investment bankers,
IBM expects to be able to issue new debt at par with a coupon rate
of 13.5% and to issue new preferred stock with a dividend rate of
17%, par value being $15 per share at $22 a share
The common stock of IBM has a beta of 1.5. The risk-free rate on
government securities is 6% and the market return from similar
investments is 14%.
IBM’s marginal tax rate is 25%. If IBM is planning to raise $
250,000 using debt, $ 150,000 using preferred stock, and $ 400,000
using common stock, what is IBM’s cost of capital?