Name: 1. Longstreet Communications Inc. (LCI) has the following capital structure, which it considers to be optimali Debt = $40,000 Preferred Stock - $25,000 Common Equity = $35,000 $100,000 LCI's tax rate is 40%, and investors expect earnings and dividends to grow at a constant rate of 5% in the future. LCI paid a dividend of $3 per share last year, and its stock currently sells at a price of $45 per share. The-years Treasury bonds yield 2.5%, and the market risk premium is 7.5%, and LCI's beta is 1.5 The following terms would apply to new security offerings. Preferred: New preferred could be sold to the public at a price of $70 per share, with dividend of $15. Flotation cost is 8% Debt: Debt could be sold at an interest rate of 12%. a. Determine the cost of each capital component. Cost of Debt after-tax: Cost of Preferred: Cost of Common Stock (using the Gordon Growth Model): Cost of Common Stock (using CAPM): Write down the WACC formula: Compute WACC using the cost of common stock computed from the CAPM)