$(50)$ Harrington Enterprises

You have been asked to calculate the weighted average cost of capital $($WACC$)$ for Harrington

Enterprises. Here are some facts:

Marginal tax rate $=0\mathrm{.}30.$

Harrington $8\%$ semiannual bonds are trading at $$748\mathrm{.}99$ and have $12$ years left to mature.

Harrington $10\%$ preferred $($annual$)$ stock with $100$ par value is trading at $$108.$

Harrington's optimal capital structure is $40\frac{\%}{10}\frac{\%}{50}\%$ across debt, preferred stock and

equity, respectively.

Common stock for Harrington is trading at $$80$ per share.

The last dividend paid by Harrington was $$7\mathrm{.}62$ and the growth rate in dividends is

expected to be $5\%$ indefinitely.

Harrington's beta is $2\mathrm{.}2$

The current T$-$bill yield is $4\%.$

The Market risk premium is five percent.

Harrington sometimes uses the bond$-$yield$-$plus$-$risk$-$premium approach. When it does, it

uses a risk premium of $2\mathrm{.}64\%.$

If Harrington issues new common stick, the flotation costs will be fifteen percent.

$$1,000,000$mil$=$ Harrington's current amount in the retained earnings account.

Please calculate $($showing all work$)$:

a$)$ Harrington's component cost of debt

b$)$ Harrington's component cost of preferred stock.

c$)$ The NPV of project $C,$ which would cost $$80$ today, and pay a cash flow of $$30$ each

year over the next $3$ years.