Exercises Section 1. Lalo's corporation capital structure consists of 25% debt, 25% preferred stock and 50% common equity. The year before, Lalo Corporation paid a dividend of $5 per common share, and its common stock sold for $50 per share; while investors expected earnings and dividends to grow at a constant rate of 12%. In addition, newly issued preferred stocks sold for a $100 per share and is expected to pay $10 per share. During the year 2018, Lalo's corporation federal tax rate was 45%, and Lalo's corporation can obtain debt at 15% interest rate. Instructions: a. Determine the cost of each of the capital components (10 points x components = 30 points) b. Calculate the weighted average cost of capital (WACC). (10 points for WACC)