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Johnsons Enterprise has the following capital structure: Assets $600,000 Debt Preferred stock $240,000 80,000 Common...

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Johnsons Enterprise has the following capital structure: Assets $600,000 Debt Preferred stock $240,000 80,000 Common stock 280,000 The common stock is currently selling at $25 a share, pays a cash dividend of $1.10 per share and is growing annually at 6%. The preferred stock pays a cash dividend of $9 and currently sells for $91 a share. The debt pays Interest of 896) annually and the company is in the 30% marginal tax bracket, Determine the company's weighted average cost of capital If a company uses too much debt financing, why does the cost of capital rise? b)

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