.The firm's noncallable bonds mature in 15 years, have 7.50% annual coupon, a par value $1,000, and a market price of $1,075. The companys tax rate is 40%. The risk-free rate is 2.50%, the market risk premium is 6.50%, and the stocks beta is 1.30. The target capital structure consists of 35% debt, 10% preferred stock, and the balance is common equity. The preferred stock currently trades at $50 and has a dividend of $4 per share.

What is the cost of debt?

What is the cost of equity?

What is the WACC?

Assume that the risk-free rate is 3.5% and the expected return on the market is 9%.

What is the required rate of return on a stock with a beta of 1.2?