Question: Preston Corp. is estimating its WACC. Its target capital structure is 2 0 percent debt, 2 0 percent preferred stock, and 6 0 percent common

Preston Corp. is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sells for $1,100. The firm could sell, at par, $100 preferred stock which pays a 8.62 percent annual dividend, but flotation costs of 5 percent would be incurred. Preston's beta is 1.2, the risk-free rate is 3 percent, and the market risk premium is 5 percent. The firm's marginal tax rate is 40 percent.
What is the cost of equity?
What is the cost of preferred stock?
What is the cost of Debt?
What is the weight% of equity?
What is the weight% of preferred stock?
What is the weight of debt?
What is Preston's WACC?

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