Reference is made to the 2015 Balance Sheet of Southwest limited.

Southwest Limited

Balance Sheet 2015

Cash	1,000,000.00	Accounts Payable	8,000,000.00
Acc. Receivable	12,000,000.00	Notes Payable	8,500,000.00
Marketable securities	3,000,000.00	Long-term Debt	20,000,000.00
Inventories	7,500,000.00	Common stock	7,500,000.00
Fixed Assets	26,500,000.00	Preferred Stock	6,000,000.00
Total Assets	50,000,000.00	Total Liabilities and Equity	50,000,000.00

Additional Information: i.

(i) The Long-Term debts consist of 8% annual coupon bonds, with 15 years to maturity and are currently selling for 95% of par.

(ii) The companys common shares which have a book value of $20 per share are currently selling at $25 per share.

(iii) Preferred shares have a book value of $100 per share. These shares are currently selling at $120 per share and pays dividends of 6% per annum.

(iv) The dividend growth rate is expected to be 3%, and dividend for 2016 is projected to be $5.00 per share.

(v) The Companys Tax rate is 30%.

Required: Determine the following for Southwest Limited:

(a) Total Market value of the firms capital structure (3 POINTS)

(b) After-tax Cost of Debt (2 POINTS)

(c) Cost of Common Stock (2 POINTS

(d) Cost of Preferred Stock (1 POINT)

(e) WACC (2 POINTS)