Brook’s Window Shields Inc. is trying to calculate its cost ofcapital for use in a capital budgeting decision. Mr. Glass, thevice-president of finance, has given you the following informationand has asked you to compute the weighted average cost of capital.The company currently has outstanding a bond with a 10.5 percentcoupon rate and another bond with a 7.4 percent coupon rate. Thefirm has been informed by its investment banker that bonds of equalrisk and credit rating are now selling to yield 11.5 percent. Thecommon stock has a price of $82 and an expected dividend (D1) of$2.60 per share. The firm's historical growth rate of earnings anddividends per share has been 5.0 percent, but security analysts onWall Street expect this growth to slow to 4 percent in futureyears. The preferred stock is selling at $78 per share and carriesa dividend of $5.20 per share. The corporate tax rate is 35percent. The flotation cost is 3.7 percent of the selling price forpreferred stock. The optimal capital structure is 25 percent debt,25 percent preferred stock, and 50 percent common equity in theform of retained earnings. a. Compute the cost of capital for theindividual components in the capital structure. (Do not roundintermediate calculations. Input your answers as a percent roundedto 2 decimal places.) b. Calculate the weighted cost of each sourceof capital and the weighted average cost of capital. (Do not roundintermediate calculations. Input your answers as a percent roundedto 2 decimal places.)