Calculation of individual costs and WACC Dillon 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 average cost is to be measured by using the following weights: 35% long-term debt 15% preferred stock, and 50% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 20%. Debt The firm can sell for exist960 a 16-year, exist1,000-par-value bond paying annual interest at a 9.00% coupon rate. A flotation cost of 2% of the par value is required in addition to the discount of exist40 per bond. Preferred stock 7.00% (annual dividend) preferred stock having a par value of exist100 can be sold for exist85. An additional fee of exist3 per share must be paid to the underwriters. Common stock The firm's common stock is currently selling for exist70 per share. The dividend expected to be paid at the end of the coming year (2016) is exist3.67. Its dividend payments, which have been approximately 50% of earnings per share in the past 5 years, were as shown in the following table: It is expected that to attract buyers, new common stock must be underpriced exist8 per share, and the firm must also pay exist3.00 per share in flotation costs. Dividend payments are expected to continue at 50% of earnings. (Assume that r_r = r_s) a. Calculate the after-tax cost of debt b. Calculate the cost of preferred stock. a. The after-tax cost of debt using the bond's yield to maturity (YTM) is %. The after-tax cost of debt using the approximation formula is %. b. The cost of preferred stock is %. c. The cost of retained earnings is %. The cost of new common stock is %. d. Using the cost of retained earnings, the firm's WACC is %. Using the cost of new common stock, the firm's WACC is %. Enter your answer in each of the answer boxes