Answer Questions Part A and Part B Use the following information for the next several questions. A 30-year, $1000 par value bond with a 4% annual coupon bond sells for $900. Preferred stock pays $9.5 in dividends per year and has a selling price of $105. The risk-free rate (30 day t-bills) is 3%, the market risk premium is 6%, the stocks beta is 1.2, dividends are growing at 4% per year, the stock will pay $4 in dividends next year, the current stock price is $50, and the bond-equity risk premium is 6%. Assume a corporate tax rate of 20% and target weights of 40% debt, 20% preferred, 40% common equity. A) Calculate the cost of preferred stock 12.85% 10.87% 9.05% 11.65% 8.08% B) Calculate the cost of common equity 9.75% 8.75% 11.75% 10.94% 12.75%