Compute the component costs of capital for a firm with the following information:

a. A bond has $150 million par (face) value and a coupon interest rate of 11%, paid semiannually. The bonds are currently selling for 104 percent of par and will mature in 20 years.

b. A common stock has a beta of 1.1, the current risk-free rate is 6.2 percent, and the expected return on the market is 12 percent.

c. A preferred stock is selling for 137 percent of par and pays an 11% dividend. Assume a $100 par value