15e5 Mednovation Inc. has developed a medical device to be marketed to medical facilities. The Board of Directors recently approved the proposal to upgrade existing production equipment and facilities for the new product. The project calls for extra financing either through debt or equity. In order to make a proper financing decision, management is interested in measuring the overall cost of capital through the following possible instruments. - Issue common stock: Common stock is currently trading at \$21 per share. The firm is expected to pay cash dividends of $3.60 per share next year and will continue to remain at the same payout level. The flotation costs are expected to be $3 per share. The stock price is expected to rise to $22 per share. - Issue preferred stock: Mednovation has $150 par value preferred stock with a current market price of $120 a share. The company currently pays an annual dividend of $20 per share. - Issue bonds: Newly issued 20 -year bonds can be sold at a par value of $1,000 with a 15% coupon rate. The firm has a 40% marginal income tax rate. A. Define and explain the concept of cost of capital. B. Calculate the cost of capital for Mednovation raised through common stock, preferred stock, and debt. Show your calculations for each instrument. C. Identify and describe one advantage and one disadvantage to Mednovation of raising capital through common stock, preferred stock and debt, respectively. D. Calculate Mednovation's weighted average cost of capital, assuming the company decided to raise capital using the following weights: 25% common stock, 30% preferred stock and 45% bonds. Show your calculations