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Longstreet Communications Inc. $($LCI$)$ has the following capital structure, which it considers to be optimal: debt $=25\%,$ preferred stock $=15\%,$ and common stock $=60\%.$ LCI's tax rate is $40$ percent and investors expect earnings and dividends to grow at a constant rate of $9$ percent in the

future. LCI paid a dividend of Rs$\mathrm{.}3\mathrm{.}60$ per share last year $($Do$),$ and its stock currently sells at a price of Rs$\mathrm{.}60$ per share. Risk$-$free rate is $7\%$ percent; on average the stock market has a $14$ percent expected rate of return; and LCI's beta is $1\mathrm{.}51.$

Preferred: New preferred could be sold to the public at a price of $"$Rs$\mathrm{.}865$

per share, with a dividend of Rs$\mathrm{.}11.$ Flotation costs of Rs$\mathrm{.}5$ per share would be incurred.

Debt: On debt, the company pays $12\%$ interest rate.

A$.$

Find the component costs of debt, preferred stock, and common stock.

B$.$

What is the WACC?