Below is the balance sheet (book value) for JP Products Inc. (JPP). The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are 1,000 common shares and 100 preferred shares outstanding. Bonds are currently selling for $935.80.

Preferred shares pay a 7.5% dividend. The beta of the common stock is 1.5, the market risk premium is 7%, and the risk free rate is 4%. The company's tax rate is 40%

a)What is the JPP's cost of debt?

b) What isJPP'scost of preferred shares?

c) What isJPP'scost of common equity?

d) What are the capital structure (weights) of JPP based on market values?

e) What isJPP'sweighted average cost of capital?

Assets Cash & short term Liabilities and Owners Equity $1,000 Bonds, coupon =8%, $10,000 securities paid semi-annually (maturity = 10 years) Accounts Receivable 3,000 Preferred stock (par 2,000 value $20 per share) Inventories 7,000 Common Stock 10,000 Plant & equipment 21,000 Retained earnings 10,000 Total $32,000 Total $32,000