$($a$)$ Almond Corporation is expected to pay a $$2\mathrm{.}50$ dividend at year end $($D$,$ $$2\mathrm{.}50),$ the dividend is expected to grow at a constant rate of $5\mathrm{.}50\%$ a year, and the common stock currently sells for $$67\mathrm{.}50$ a share. The before$-$tax cost of debt is $7\mathrm{.}50\%,$ and the tax rate is $40\%.$ The target capital structure consists of $45\%$ debt and $55\%$ common equity. What is the company's weighted average cost of capital $($WACC$)$ if all the equity used is from retained earnings?

$($b$)$ A firm has determined its optimal capital structure which is composed of the

following sources.

Preferred Stock:

The firm has determined It can issue preferred stock at $$75$ per share par value. The stock will pay a $$10$ annual dividend. The cost of issuing and

selling the stock is $$3$ per share.

Common Stock:

The firm's common stock is currently selling for $$18$ per share. The dividend ing year is $$1\mathrm{.}74.$ Its dividend expected to be paid at the end of the coming payments have been growing at a constant rate of $3\%$ for the last four years. It is expected that to sell, a new common stock issue must be underpriced,

with floatation costs of $$1$ per share.

Based on the above Information, what is the firm's cost of preferred stock and cost of a new issue of common stock? Which of the two sources offers a lower cost? Show your workings.