Calculate Cost of debt, cost of preferred stock, and cost of common equity.

Firm calculating cost of capital for major expansion program.

Tax rate = 21%.

10-year, 8% coupon, semiannual payment noncallable bonds sell for $1,153.72. New bonds will be privately placed with no flotation cost.

7%, $100 par value, annual dividend, perpetual preferred stock sells for $120.

Common stock sells for $70. D₀ = $4.39 and g =4.09%.

b = 1.1; r_RF = 6%; Market Risk Premium = 6%.

Bond-Yield Risk Premium = 4%.