Vandalay Industries common stock (1,800,000 shares) has a beta of 1.5. The company just paid a dividend of $.80, and the dividends are expected to grow at 5% per year. The expected return on the market is 12%, and Treasury bills are yielding 5.5%. The most recent stock price for Vandalay is $61. It has 40,000 semi-annual-coupon bonds priced at $1,198 with pre-tax cost of debt of 5.5%. It also has 100,000 shares of 4% dividend preferred stock with par value of $100 and a current price of $78. Ignore all floatation costs. The tax rate is 40%.

a. Calculate the cost of equity using the DCF method.

b. Calculate the cost of equity using the CAPM method.

c. Calculate the after-tax cost of debt.

d. Calculate the cost of preferred stock.

e. What are the percentages of total value of Vandalay in equity, debt and preferred stock?

f. What is Vandalay's WACC, assuming cost of equity as average of (a) and (b)?