The following Balance Sheet extract relates to the Snapple Company:

Bonds payable $1,000,000

Common Stock $3,000,000

Preferred Stock $2,000,000

Additional Information:

The bonds are 8%, annual coupon bonds, with 9 years to maturity and are currently selling for 95% of par.

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

The company has an equity beta of 1.5 and the current Treasury bill rate is 3.5%. The market risk premium is 1.5%

The preferred dividends are 5% preferred shares with a book value of $100 per share. These shares are currently selling at $80 per share.

The Companys tax rate is 35%.

a) Calculate Snapples cost of debt. [5 marks]

b) Calculate Snapples cost of equity. [5 marks]

c) Calculate Snapples cost of preferred shares. [3 marks]

d) Calculate Snapples Weighted Average Cost of Capital [8 marks]