Question: Lancaster Engineering Inc. (LEI) has the following capital structure: Debt 25% Preferred stock 15% Common Equity 60% LEI's corporate income tax rate is 40%. Investors expect LEI's dividend to grow at a constant rate of 9% in the future. LEI has just paid a dividend of $3.60 per share (D0), and its common stock currently sells at a price of $54 per share. LEI can issue new preferred stock, with annual dividend of $11, at a price of $95 per share. LEI can also issue new corporate bond with yield to maturity, 12%.