1. Hook Industries has a capital structure that consists 20% common equity, 15% preferred stock and 65% debt. The company can issue after tax cost of debt at 14%. Its stock currently pays a $5 dividend per share (D₀ = $5), and the stocks price is currently $28.75. The companys dividend is expected to grow at a constant rate 9% per year; its tax rate is 40%. If the companys weighted cost of capital is 16% calculate the cost of the preferred stock.