Changing the Capital Structure

Paper instructions:
Company X is considering changing its capital structure in light of the tough business environment. Currently, Company X’s total capital consists of:
$950 million in debt
$500 million of preferred stock
$900 million in common stock
The debt coupon is 8% and tax rate is 40%, while the current preferred share price is $96.20 and the dividend per share is $9.
The company’s common stock is trading at $25.50, its dividend payout this year is $1.15, and the growth rate of the dividend is 8.5%.
Find the weighted average cost of capital given the data above.
If Company X wants to change its capital structure (i.e., lower its WACC), what should it do (Show/formulate numerically a new new capital structure similar to that of this assignment above with proper jutification? For example, you can look into the current economic activities and determine better ways you can raise capital and lower WACC. Simply saying,reduce debt by …etc is not enough.
Show your calculations in detail and explain your reasoning.
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