A. The firm's tax rate is 40% and its before tax cost of debt is 10%

B. The current price of Jana's 12% coupon, semiannual payment, noncallable bonds with 15 years remaining to maturity is $1,153.72.Jana does not use short-term interest-bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost.

C. The current price of the firm's 10%, $100 par value, quarterly dividend, perpetual preferred stock is $116.95.Jana would incur flotation costs equal to 5% of the proceeds on a new issue.

D.Jana's common stock is currently selling at $50 per share. Its last dividend (D0) was $3.12, and dividends are expected to grow at a constant rate of 5.8% in the foreseeable future.Jana's beta is 1.2, the yield on T-bonds is 5.6%, and the market risk premium is estimated to be 6%. For the own-bond-yield-plus-judgmental-risk-premium approach, the firm uses a 3.2% judgmental risk premium.

E.Jana's target capital structure is 30% long-term debt, 10% preferred stock, and 60% common equity.

1.Explain what sources of capital should be included when you estimateJana's weighted average cost of capital (WACC)?(1 point)