1. Refer to Lancaster Engineering Inc. (LEI) information below, what is LEIs weighted average cost of capital (WACC)? (Note: Keep your answer. There are two other related questions.)

   Use the following information for the three questions referring to Lancaster Engineering Inc. (LEI):

   Lancaster Engineering Inc. (LEI) has the following capital structure:

   Debt 25%

   Preferred stock 15%

   Common Equity 60%

   LEIs corporate income tax rate is 40%. Investors expect LEIs dividend to grow at a constant rate of 9% in the future. LEI has just paid a dividend of $3.60 per share (D₀), and its common stock currently sells at a price of $54 per share. LEI can issue new preferred stock, with annual dividend of $11, at a price of $95 per share. LEI can also issue new corporate bond with yield to maturity, 12%.

   	A.	13.30%
   	B.	9.00%
   	C.	14.50%
   	D.	12.70%
   	E.	11.68%