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 follo ng weights. 35% long-term debt, 20% preferred stock, and 45% common stock equity (retained ea gs, new common stock, or both). The fin s tax rate is 35% Debt The firm can sell for $975 a 14-year, S 1,000 par value bond pay ng annual interest at a 00% coupon rate. A flotation cost of 3% of he par value is re u red in addition to he discount of SS er ord. Preferred stock 10.00% (annual dividend) preferred stock having a par value of S100 can be sold for S80. An additional fee of $5 per share must be paid to the underwriters. Co mmon stock The firm's common stock is currently selling for $80 per share. The dividend expected to be paid at the end of the coming year 2016 is $3.27 ts dividend payments, which have been approximately 60% o earnings per share in the past 5 years, were as shown in the following table: EE It is expected that to attract buyers, new common stock must be underpriced S5 per share, and the must a so pay S4 00 per share in otation costs. Dividend payments are expected to continue at 60 o ea ings Assume at -, a. Calculate the after-tax cost of debt. b. Calculate the cost of preferred stock. c. Calculate the cost of common stock. d. Caloulate the WACC for Dillon Labs