10 Year Treasury Bond Yield = 2.30% Common Share Beta = 1.5 Expected Market Risk Premium between 4.00% and 6.00% Common Share Price = $13.00 Common Share Dividend = $0.30 Common Shares Outstanding = 100 million Preferred Share Dividend = $2.00 Preferred Shares Outstanding = 3 million . Preferred Share Dividend Yield = 6% Debt Maturity = 20 Years Coupon Rate on Debt = 4.00% (assume annual coupon payments) Spread to Treasury Yield = 1.30% . Book Value of Debt = $700 million Tax Rate = 20% (a) Calculate the firm's weighted average cost of capital (WACC). (b) What is the flotation cost and Marginal Cost of Capital (MCC) for equity if the firm needs to raise $500 million of new equity? You may assume that the shares are issued at $13.00 a share, that the pre-tax underwriting fees are 3.30%, that the firm pays fixed pre-tax offering fee of $3.5 million, and that you may use your results from part a) in your answer. (c) What is the firm's new WACC, if the firm uses $350 million of the equity issue in part (b) to retire outstanding debt. You may assume that with a lower debt level, the firm's beta is now 20% lower, that the firm's share price hasn't changed, and that you may use your results from parts a) and b) in your