a-Your first task is to estimate the company weighted average cost of capital (WACC) and you have been provided with the following most recent data:

The firm's tax rate =40%

Company has issued 6% coupon semi-annual payment non-callable bonds, with a maturity date of 2027.The bonds are sold today 25th of May 2021 at $1022. New bonds would be privately placed with no flotation cost.

The current price of the firm's preferred stock is $160.10, and the dividend is $10. company) will incur flotation cost of $2 per share on a new issue.

company common stock is currently selling at $54.62 per share. Its last dividend (D0) was $1.65, and dividends are expected to grow at 3%in the foreseeable future. company beta is 0.56, the yield on T-bonds is 4% and the average return on the market is 10%.

a-The target capital structure is 25% for long term debt, 5% for preferred stock and 70% for common equity. company weighted average cost of capital (WACC)?

b- What is the direct effect of an increase of the tax rate on the WACC. Show using the previous data to explain your answer.