Intro Hondia is considering increasing production after unexpected strong dermand for its new motorbike. To evaluate the proposat, the company needs to calculate its cost of capital You've collected the followng information: - The company wants to maintain is current captal structure, which is 40% equiv, 20% preferred stock and 40% debt. - The firm has marginal tax rate of 345 - The firm's preferred stock pays an annual dividend of 536 forever, and each share is currently worth $135.26 - The firm has one bond outstanding with a coupon rate of 6%, paid semiannualy, 10 years to matunty, a face value of $1,000, and a current price of $864.1 - Honda's beta is 0.5, the vield on Treasury bonds is is 1.8%6 and the expected return on the markel portlolio is 6%. - The current stock pnce is \$47.15. The firn has just paid an annual dividend of $1.36, Which is expected to grow by 4% per year - The firm uses a nisk premium of 3% for the bond-yeld-plus -risk-premum approach - New preferred stock and bonds would be issued by private placement, largely elminating flotation costs. New equity would come from retained eamings, thus eliminating fotation costs Part 1 B. Atternpt 15 for 10pts : What is the (pre-tax) cost of debt? Part 2 - Alternpt 1/5 for 10pts What is the cost of preferred stodk