ABC Corporation is estimating its WACC. Its target capital structure is $20$ percent debt, $20$ percent preferred stock, and $60$ percent common equity. Its bonds have an $11$ percent coupon, paid semiannually, a current maturity of $15$ years, and sell for $$1,050.$ The firm could sell, at par, $$100$ preferred stock which pays a $12$ percent annual dividend, but flotation costs of $5$ percent would be incurred. ABC Corp$$s beta is $1\mathrm{.}0,$ the risk$-$free rate is $8$ percent, and the market risk premium is $5\mathrm{.}5$ percent. ABC Corporation is a constant$-$growth firm which just paid a dividend of $$2\mathrm{.}00,$ sells for $$27\mathrm{.}00$ per share, and has a growth rate of $8$ percent. The firm's policy is to use a risk premium of $4$ percentage points when using the bond$-$yield$-$plus$-$risk$-$premium method to find rs$.$ Firm's marginal tax rate is $35\%.$

$3.$ What is ABC firm$$s cost of debt for the purpose of calculating WACC?

a$.3\mathrm{.}7\%$

b$.4\mathrm{.}1\%$

c$.4\mathrm{.}9\%$

d$.3\mathrm{.}4\%$

e$.5\mathrm{.}9\%$

$4.$ What is the firm's cost of common stock $($rs$)$ using the dividend discount model approach?

A$.15\mathrm{.}6\%$

B$.14\mathrm{.}1\%$

C$.16\mathrm{.}3\%$

D$.16\mathrm{.}6\%$

E$.16\mathrm{.}0\%$

$5.$ What is ABC firm' cost of common stock $($rs$)$ using the CAPM approach?

a$.13\mathrm{.}5\%$

b$.14\mathrm{.}1\%$

c$.16\mathrm{.}0\%$

d$.15\mathrm{.}6\%$

e$.14\mathrm{.}9\%$