a) Pep Company Limited (PCL) has the following capital structure, which it considers to be optimal: debt is 30%; preferred stock is 20%; and common stock is 50%. PCL's tax rate is 25%, and investors expect earnings to grow at a constant rate of 6% in the future. TCL last paid a dividend of $3.50 per share and the stock currently sells at $70 per share. The following terms would apply to new security offerings. Preferred: New preferred could be sold to the public at a price of $88 per share, with a dividend of $8. Flotation costs of $6 per share would be incurred. Debt: Debt could be sold at an interest rate of 12%. Common: New common equity will be raised only by retained earnings. i. Calculate the cost of each capital structure component. ii. Determine the weighted average cost of capital for PCL