For Q1-Q4:UT rentals recently hired you as a consultant to estimate the companys WACC. You have obtained the following information. (1) The firm's noncallable bonds mature in 20 years, have a 7.50% annual coupon, a par value (Face value) of $1,000, and a market price of $1,100.00. (2) The companys tax rate is 40%. (3) The risk-free rate is 2.50%, the market risk premium is 7.50%, and the stocks beta is 1.40. (4) The target capital structure consists of 35% debt, 10% preferred stock, and the balance is common equity. (5) The preferred stock currently trades at $50 and has a dividend of $4 per share.

A. What is the cost of debt?

B. What is the cost of preferred stock?

C. What is the cost of equity? (use CAPM model to compute)

D. What is the WACC?