Rolodex Inc would like to estamate its average cost of capital for the coming year. The Capital budgeting plans call for funds totaling $200 million for the coming year. These funds will be raised from long-term debt preferred stock and common equity in the same proportions as their book values in thr firms balance sheet shown below:Current assets $110 Fixed assest $260= total assets$370. Accounts payable %30 Other current liabilities $20 long term debt $128 Preferred stock $32 Common stock (20milion shares at par) $20 Contributed capital in excess of par $30 Retained earnings $100 Total liabilities $370.1. Rolodex maximum borrowing is $80million from its bank at a pretax cost of 13% 2. Preferred stock can be issued at a pretax cost of 16.5%. 3. Rolodex expects to generate $140million in net income. Any earnings remaining after meeting the equity portion of the $200million capital expenditure budget will be paid out as dividends. 4. Rolodex marginal tax rate is 40%.