XYZAB Limited has a target capital structure of 45% debt, 15% preferred stock and 40% common equity. The firm issued 2,000 semi-annual bonds, each at R1,200 with a coupon rate of 15%, a maturity period of 10 years and a par value of R1,000. The firm's preferred stock pays a dividend of R 15 per share and currently sells for R105 per share. However, the net proceeds to the firm from the sale of new preferred stock is only R90 per share. XYZAB Limited's common stock currently sells for R55 per share and the firm recently paid a dividend of R 5 per share on its common stock and the dividend is expected to grow indefinitely at a constant rate of 5% per annum. The firm has a tax rate of 30%. Page 3 of 5 a) What is the firm's after-tax cost of debt? b) What is the firm's cost of newly issued preferred stock? c) What is the firm's cost of common stock? d) Calculate the firm's weighted average cost of capital (WACC) e) XYZAB Limited has a Research and Development division operating independently to produce cutting-edge products. This division has its own target capital structure of 30% debt and 70% equity as well as a beta of 1.5 and cost of debt of 14%. Given a market risk premium of 8%, a risk-free rate of 6%, what WACC should the division use to discount its cashflows