Exactly five years ago, Lee Corp. issued bonds with an original maturity of 25 years. These bonds pay interest semi-annually, and have a fixed coupon rate of 6.5%. These bonds are currently trading for $1070 for each $1000 of face value. The company faces a marginal tax rate of 25%. Lee Corp. also has some perpetual preferred stock outstanding that pay a fixed (annual) dividend of $9 per share. Each of these shares has a par value of $75, and is currently trading for $108. Lees management intends to continue raising 40% of its funds from debt, 10% from preferred equity, and the remainder from common equity.

A. Find Lees pre-tax marginal cost of debt.

B. Find Lees post-tax marginal cost of debt.

C. In describing your calculations as Lees marginal cost of debt, what are you implicitly assuming about Lees plans about the maturity of any new debt it might issue?

D. Estimate Lees marginal cost of preferred equity.

E. Given your calculations above, estimate Lees weighted average cost of capital (WACC).

*Please solve using an explanation within an Excel file. Thank you!