Use the following described situation to answer questions numbered 6 and 7.

Wellcare Health and Rehabilitation Inc. (WHR) operates a chain of health and rehabilitation centers in Illinois. An investment analyst with a private equity fund which owns some of WHRs stock is wanting to estimate the companys weighted average cost of capital. WHRs chief financial officer told the investment analyst that WHR will not invest in any project which cannot earn at least a 17% Return on Assets. The company has 6 million shares of stock outstanding and these shares are valued at $55.50 per share. The company has a stock beta that is estimated to be 1.72. Assume the current average expected stock market return is 14.50% and the relevant current U.S.Treasury Note interest rate in the market is 4.20%. The company also has some bonds outstanding with 11 years to maturity, are trading at $983.00 per bond with a $1,000 face value, and the company has 400,000 of these bonds outstanding. The bonds pay interest annually based on a 6.50% coupon interest rate. WHR is planning to issue $100 million of new preferred stock, which will have a par value of $100 per share, dividends per share of $10, and per-share flotation costs of $8.00 per share. The company has a marginal income tax rate of 33%. 6. What is WHRs Pre-Tax Cost of Debt? After-Tax Cost of Debt? a. 6.7236% and 4.5048% b. 6.7236% and 2.2188% c. 6.5000% and 4.3550% d. 6.6124% and 4.4303% 7. What is WHRs Pre-Tax Cost of Preferred Stock? After-Tax Cost of Preferred Stock? a. 5.4348% and 3.6413% b. 6.7654% and 3.3827% c. 10.8696% and 10.8696% d. 10.8696% and 7.2826% 8. Wilson-Smith Inc.s capital structure is briefly described below. Compute the companys weighted average cost of capital (WACC). The companys marginal income tax rate is 35%. Capital Percent of Capital Structure Pre-Tax Cost Bonds 40 % 8.23 % Preferred Stock 10 % 9.50 % Common Stock 50 % 23.00 % a. 16.70 % b. 17.08 % c. 18.40% d. 14.59%