Calculation of individual costa and WACC DIllion labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted cost is to be measured by using the following weights: 40% long term debt, 10% preferred, and 50% common stock equity (retained earnings, new common stock or both). The firm's tax rate is 40%

DEBT the firm can see $980 a 10-year, $1000 par value bond paying annual interest at a 10% coupon rate. A flotation cost of 3% of the par value is requireed in adition to the discount of $20 per bond.

PREFERRED STOCCk 8% (annual dividend) preferred stock having a par value of $100 can be sold for $65. AN additional fee of $2 per share must be paid to the underwriters.

COMMON STOCK The firm's common stock is currently selling for $50 per share. The dividend expected to be paid at the end of the coming year (2016) is $4. Its dividend payments, which have been approximately 60% of earnings per share in each of the past 5 years, were as shown

2015 $3.75 2014 $3.50

2013 $3.30

2012 $3.15

2011 $2.85

It is expected to attract buyers, new common stock must be underpriced $5 per share, and the firm must pay $3 per share in flotation costs. Dividend payments are expected to continue at 60% of earnings.

a. calculate the after tax debt

b. calculate the cost of preferred stock

c. calculate the cost of common stock

d. calculate the WACC for Dillion Labs.