Lord's Corporation has $8\mathrm{.}5$ million shares of common stock outstanding, $250,000$ shares of $5$ percent preferred stock outstanding, and $135,000$ bonds outstanding, with a semiannual coupon of $7\mathrm{.}5$ percent and a par value of $$1,000$ each.

The common stock currently sells for $$34$ per share and has a beta of $1\mathrm{.}25,$ the preferred stock currently sells for $$91$ per share, and the bonds have $15$ years to maturity and sell for $114$ percent of par.

The market risk premium is $7\mathrm{.}5$ percent, T$-$bills are yielding $4$ percent, and Lord's tax rate is $35$ percent.

Required:

a$.$ What is the firm's cost of equity?

$(3$ marks$)$

b$.$ What is the firm's after$-$tax cost of debt?

$(4$ marks$)$

c$.$ What is the market value for each element in the firm's capital structure? $(6$ marks$)$

d$.$ If Lord's Corporation is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows?

$(7$ marks$)$