Atlanta Industries common stock (1,800,000 shares) has a beta of 1.5. The company just paid a dividend of $.80, and the dividends are expected to grow at 5% per year. The expected return on the market is 12%, and Treasury bills are yielding 5.5%. The most recent stock price for Atlanta is $61. It has 40,000 semi-annual-coupon bonds with a 7% coupon rate, a par value of $1000, and a current price quote of 119.80%; the bonds have 25 years to maturity. It also has 100,000 shares of 4% dividend preferred stock with a current price of $78 and a par value of $100. Ignore all floatation costs. The tax rate is 40%.

a. Calculate the cost of equity using the DCF method.

b. Calculate the cost of equity using the CAPM method.

c. Calculate the before-tax cost of debt.

d. Calculate the cost of preferred stock.

e. What are the percentages of total value of Atlanta in equity, debt and preferred stock?

f. What is Atlantas WACC, assuming cost of equity as average of a) and b)?