2) Nova Inc. is interested in measuring its overall cost of capital. The tax rate of the firm is currently 40%. The needed financial information and data are as follows: Debt: Nova can raise debt by selling $1,000-par-value, 6.5% coupon interest rate, 10-year bonds on which annual interest payments will be made. Since the market interest is higher than the coupon rate, to sell the issue, an average discount of $20 per bond needs to be offered. There is an associated flotation cost of 2% of par value. Preferred stock: Preferred stock can be sold under the following terms: The security has a par value of $100 per share, the annual dividend rate is 6% of the par value, and the flotation cost is expected to be $4 per share. The preferred stock is expected to sell for $102 before cost considerations. Common stock: The risk-free rate of return offered by government security issued for short term is 3%, the market risk premium is 10% and the beta of the Nova Inc. stock is 1.5 (Hint: Total capital raised is the sum of long term debt, preferred stock and common stock, which is $1,767,500+$1,414,000+$1,868,500= $5,050,000. so, weight of debt would be, W.=Market value of long term debt + Total capital raised= $1,767,500 + $5,050,000 = 0.35 or 35%. Similarly you can calculate the weight of preferred stock and weight of common stock] Required: a. Calculate the after-tax cost of debt. b. Calculate the cost of preferred stock. C. Calculate the cost of common stock. d. Calculate weight of each source of capital. e. Calculate the firm's weighted average cost of capital using new common stock