1. Show your work with the data below: (50 points) Calculate the WACC which represents the "hurdle rate" for a typical project with average risk using the average rate of the range of the marginal cost of common equity using retained earnings or new earnings: Data: - A 10-year, 10% coupon, semiannual payment non-callable bonds sell for $1,153.72. New bonds will be privately placed with no floatation cost. - A 10%, $1,000 par value, annually dividend, perpetual preferred stock sells for $1,111. - Both an existing common stock and a new common stock issue, which incurs no flotation cost, sells for $100. D1 = $4.3995 and g=5. Beta = 1.2; rrf = 7%; RM=10%. - Bond-yield risk premium = 4%. - Target capital structure: 40% debt, 10% preferred stock, 50% common equity. The tax rate is 25%.