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The two cost terms are expressed as interest rate percentages. Because virtually all corporations have a mix of capital sources, the CPPC is an intermediate value of the costs of debt and equity capital. Knowing the fraction of each type of equity financing — common shares, preferred shares, and retained earnings — expands equation (10.2). CPPC = (fraction of common stock) (cost of common stock capital) + (fraction of preferred stock) (cost of preferred stock capital) + (fraction of retained earnings) (cost of capital of retained earnings) + (fraction of debt) (cost of debt equity) (10.3