Ink Inc. has target capital structure of 10% preferred stock, 50% common equity, and 40% debt. Ink has outstanding 20 year annual, 6% coupon bonds selling for $894. The par value of the bonds is $1,000. Ink’s common stock sells for $50 per share and is expected to grow at 8% and expected to pay a $2 dividend next year. If Ink sells new common it must pay a $5 flotation fee. Ink’s preferred stock currently sells for $95, and its annual dividend is $5 per share. If Ink were to sell new preferred, it would pay $5 per share as flotation cost. Ink’s tax rate is 40%.
What is Ink’s after-tax cost of debt capital?
What is Ink’s cost of preferred stock capital?
What is Ink’s cost of common stock?
What is the firm's WACC for the capital?