Use the following data to answer the A through D part.

The company has a target capital structure of 40% debt and 60% equity. Bonds with face value of $1,000 pay a 10% coupon (semiannual), mature in 20 years, and sell for $849.54 with a yield to maturity of 12%.

The company stock beta is 1.2.

Risk-free rate is 10%, and market risk premium is 5%

. The company is a constant-growth firm that just paid a dividend of $2, sells for $27per share, and has a growth rate of 8%.

The company's marginal tax rate is 40%.

A. ) The company's after-tax cost of debt is: A. 6.6%. B. 6.9%. C. 7.2%. D. 8.0%. E. 9.1 %.

B.) The company's cost of equity using the capital asset pricing model (CAPM) approach is: A. 16.0%. B. 16.9%. C. 17.2%. D. 18.0%. E. 19.1 %.

C). The company's cost of equity using the dividend discount model is: A. 16.0%. B. 16.9%. C. 17.2%. D. 18.0%. E. 19.1 %.

D.)The company's weighted average cost of capital (using the cost of equity from CAPM) is closest to: A. 11.6%. B. 11.9%. C. 12.2%. D. 12.5%. E. 13.1 %.