Lai Chy Inc. (LCT) has the following capital structure, which it considers to be optimal, consisting of debt = 25 percent, preferred stock = 15 percent, and common stock = 60 percent. LCI's tax rate is 40 percent and investors expect earnings and dividends to grow at a constant rate of 6 percent in the future. LCI paid a dividend of $3.60 per share last year, and its stock currently sells at a price of $60 per share. New security offerings include; i. Preferred shares: New preferred shares could be sold to the public at a price of $100 per share, with a dividend of $9. Floatation costs of $5 per share would be incurred. ii. Debt: Debt with a coupon rate of 9 percent could be sold at par. a. Find the component costs of debt, preferred stock and common stock. Assume LCI does not have to issue any additional shares of common stock. (10 marks) b. Calculate the weighted average cost of capital (WACC) for LCI. (4 marks) c. Suppose preferred shares could be sold for only $90 per share, and LCI pays 10 percent coupon rate for debt instead of 9 percent, while other information remain unchanged, what will be the new cost for preferred stock and cost of debt? (7 marks) d. Calculate the new WACC considering the changes in part c. New capital structure to be considered is 35 percent debt, 15 percent preferred stock and 50 percent. (4 marks)