Financial management help please?

The comfort corporation manufactures sofas and tables for the recreational vehicle market. The firm's capital structure consists of 60 percent common equity, 10 percent preferred stock, and 30 percent long-term debt. This capital structure is believed to be optimal. Comfort will requite $120 million to finance... show more The comfort corporation manufactures sofas and tables for the recreational vehicle market. The firm's capital structure consists of 60 percent common equity, 10 percent preferred stock, and 30 percent long-term debt. This capital structure is believed to be optimal. Comfort will requite $120 million to finance expansion plans for the coming year. The firm expects to generate enough internal equity to meet equity portion of its expansion needs. The cost of retained earnings is 18 percent. The firm can raise preferred stock at a cost of 15 percent. First-mortgage bonds can be sold at a pretax cost of 14 percent. The firm's marginal tax rate is 40 percent.

Calculate the cost of capital for the funds needed to meet the expansion goal.
2 answers 2