G Corporation is estimating its WACC. Its target capitalstructure is 20% debt, 20% preferred stock, and 60% common equity.Its bonds have a 10% coupon, paid semiannually, a current maturityof 20 years, and sell for $850. The firm could sell, at par, $100preferred stock which pays a 12% annual dividend. Greshak's beta is1.2, the risk-free rate is 10%, and the market risk premium is 5%.The firm's marginal tax rate is 40%. What is the company’s WACCcomponent cost of equity (rs)?
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