WSTB Ltd determined its optimal capital structure composing of the following sources of capital, and targeted market capitalisation proportions: (i) Debt: The firm can sell a 10-year 6% coupon rate bond for $1,000 at par. (ii) Preferred Stock: WSTB issues the preferred stock at $65 per share. The preference shareholders will receive $8.00 annual dividend forever. (iii) Common Stock: The firm's common stock is currently selling for $40 per share. The dividend expected to be paid at the end of the coming year is $5.07. Its dividend payments have been growing at a constant rate for the last five years. Five years ago, the dividend was $3.45. (iv) Corporate tax rate: WSTB's marginal tax rate is 35%. (a) Calculate the cost of debt, cost of preferred stock, and cost of equity of WSTB Ltd. (6 marks) (b) Calculate WSTB's weighted average cost of capital (WACC) assuming the firm has exhausted all retained earnings. Can WSTB use firm's overall WACC to evaluate its standalone investment projects? Explain your answer. (4 marks) WSTB Ltd determined its optimal capital structure composing of the following sources of capital, and targeted market capitalisation proportions: (i) Debt: The firm can sell a 10-year 6% coupon rate bond for $1,000 at par. (ii) Preferred Stock: WSTB issues the preferred stock at $65 per share. The preference shareholders will receive $8.00 annual dividend forever. (iii) Common Stock: The firm's common stock is currently selling for $40 per share. The dividend expected to be paid at the end of the coming year is $5.07. Its dividend payments have been growing at a constant rate for the last five years. Five years ago, the dividend was $3.45. (iv) Corporate tax rate: WSTB's marginal tax rate is 35%. (a) Calculate the cost of debt, cost of preferred stock, and cost of equity of WSTB Ltd. (6 marks) (b) Calculate WSTB's weighted average cost of capital (WACC) assuming the firm has exhausted all retained earnings. Can WSTB use firm's overall WACC to evaluate its standalone investment projects? Explain your answer. (4 marks)