Lancaster Engineering Inc (LEI) has the following capital structure, which it considers to be optimal. Long Term Debt 30% Preferred Stock 10% Common Stock m Total 100% 0 LEI can obtain capital in the following ways: 0 New Preferred Stock with a dividend of $12 can be sold at $97 to the public; however LEI will incur $2 of flotation costs for each share it sells. . Debt can be sold at a pre-tax cost of 12%. LEI's tax rate is 40%. (Note that 12% is the pretax cost; all costs must be expressed on an after-tax basis so as to be comparable.) 0 LEI can sell its common stock for $55. However they expect underwriting fees to be $3 per share and an additional $2 per share in other flotation costs. They expect to pay a dividend on the common stock next year of $3.50 and it is expected that dividends will continue to grow at the historical rate of 8%. Required: 1. Determine the cost of each capital component. 2. Determine the weighted average cost of capital (WACC) for LEI