Scenario: you work for an investment banking firm and have been asked by management of vestor corporation (not real), a software development company, to calculate its weighted average cost of capital, to use in evaluating a new company investment. the firm is considering a new investment in a warehousing facility, which it believes will generate an internal rate of return of 11.5%. the market value of vestor's capital structure is as follows: source of capital market value bonds $10,000,000 preferred stock $2,000,000 common stock $8,000,000 to finance the investment, vestor has issued 20 year bonds with a $1,000 par value, 6% coupon rate and at a market price of $950. preferred stock paying a $2.50 annual dividend was sold for $25 per share. common stock of vestor is currently selling for $50 per share and has a beta of 1.2. the firm's tax rate is 34%. the expected market return of the s& p 500 is 13% and the 10-year treasury note is currently yielding 3.5%.