Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell at par of $1,000. The firm can sell, at par ($100), preferred stock which pays a 12 percent annual dividend, but flotation costs of 5 percent of the proceeds would be incurred. Rollins' beta is 1.2, the risk-free rate is 10 percent, and the market risk premium is 5 percent. Rollins is a constant-growth firm which just paid a dividend of $2.00, sells for $27.00 per share of common equity, and has a growth rate of 8 percent. The firm's policy is to use a risk premium of 4 percentage points when using the bondyield-plus-risk-premium method to find the cost of common equity (r5.). The firm's marginal tax rate is 40 percent. What is Rollins' after-tax cost of debt? 1) 10.0% 2) 9.1% 3) 8.6% 4) 8.0% 5) 7.2% What is Rollins' cost of preferred stock? 1) 10.0% 2) 11.0% 3) 12.0% 4) 12.6% 5) 13.2% What is Rollins' cost of common stock using the CAPM approach? 1) 13.6% 2) 14.1% 3) 16.0% 4) 16.6% 5) 16.9% What is the firm's cost of internal equity using the discounted cash flow (DCF) approach? 1) 13.6% 2) 14.1% 3) 16.0% 4) 16.6% 5) 16.9% What is Rollins' cost of common stock using the bond-yield-plus-risk-premium approach? 1) 13.6% 2) 14.1% 3) 16.0% 4) 16.6% 5) 16.9% What is Rollins' WACC? 1) 13.6% 2) 14.1% 3) 16.0% 4) 16.6% 5) 16.9%