Craymer Corporation has issued a total of 10 million common shares, 5 million preferred shares, and 10,000 bonds (no bank debt). The book values and market values of the securities are shown below: Common shares Preferred shares Bonds Book Value $10,000,000 $5,000,000 $10,000,000 Market Value $35,000,000 $4,000,000 $9,500,000 The company uses CAPM to estimate its cost of common equity, and it believes that the beta of its common stock should increase by 10% in the near future due to higher-risk businesses that the company intends to undertake. The required return of its common shares is currently 17%. The preferred stock's annual dividend is $0.08. The bonds which have par value of $1,000 still have 10 years to maturity, and pay 6% coupon annually. The risk-free rate is 3% and the market return is 10%. Going forward, Craymer intends to achieve and maintain a capital structure comprising 30% debt, 20% preferred stock, and 50% common equity. The corporate tax rate is 30%. (a) What is the cost of preferred stock? (2 marks) (b) What is the cost of debt? (3 marks) (c) What is the cost of common equity that Craymer should use to compute WACC for new projects? (3 marks) (d) What is the appropriate WACC that Craymer should use for evaluating new projects? (2 marks)