Remaining Time: 1 hour, 58 minutes, 21 seconds. Question Completion Status: QUESTION 5 Chanel Inc. has asked you to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 20% long-term debt, 40% preferred stock, and 40% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 35%. Debt: The firm can sell for $900 a 10-year, $1,000-par-value bond paying annual interest at a 10% coupon rate. A flotation cost of 2.5% of the par value is required for the bonds. Preferred stock: 10% (annual dividend) preferred stock can be sold for $90. An additional fee of $5 per share must be paid to the underwriters Common stock: The firm's common stock is currently selling for $50 per share. Dividends are expected to grow at 3% and the dividend expected to be paid at the end of the coming year (2019) is $5. In addition you are told that the firm is considering two mutually exclusive projects, each with an initial investment of $500,000. The company's board of directors has set a maximum 3-year payback requirement. The cash inflows associated with the two projects are shown in the following table. Cash Inflows Years Project Project B 1 2 3 120,000 90,000 120,000 110,000 150,000 130,000 120,000 150.000 120,000 170,000 4 5 Click Save and Submit to save and submit. Click Save All Answers to save all answers Save All Answers Close 6 120,000 190,000 a. Calculate the after-tax cost of debt. b. Calculate the cost of preferred stock. c. Calculate the cost of common stock. d. Calculate the WACC. (Hint: Use this as the rate to be used in later parts) e. Calculate the payback period for each project. f. Calculate the NPV of each project. g. Derive the IRR of each project. h. Rank the projects by each of the techniques used. Make and justify a recommendation