QUESTION 3 What is the after-tax cost of debt for Intel? A. 2.78% B.3.31% C.3.73% D.4.16% QUESTION 4 What is Intel's cost of preferred stock? A. 16.76% B.6.76% C. 4.06% D.3.48% Part I: WACC Use this information to answer questions 1-8 Suppose Intel wants to raise capital to start a new project to bring their manufacturing process back to the U.S. The pandemic has shown them that they cannot rely on a foreign supplier. The CEO asks you to calculate their weighted average cost of capital. He gives you these facts. Tax rate - 21.5%. Intel has the following bonds all have a face value of $1,000: 5-year, 4.6% coupon, semiannual payment non-callable bonds with a price of $1.116. 20 year. 6.2% coupon semiannual payment callable bonds with a price of $1,135. And 20 year, 5.9% coupon semiannual payment non-callable bonds with a price of $1,148. New bonds will be privately placed with no flotation cost. Intel has preferred stock that sells for $150.00. It pays an annual dividend of $5.22 Their common stock sells for $109.26. The annual dividend is $1.25 and the dividend growth rate is 3.7% a year. The stock has a Beta of 1.2. The risk free rate is 1 % and the market risk premium is 5.8%. Intel considers their bond-Yield Risk Premium to be 4%. Intel currently has 30% of their capital coming from debt, 20% from preferred stock and 50% from common equity, however their target is to have 35% from debt, 10% from preferred stock and 55% from common equity. 1