Transcribed image text: Question 5 - Cost of Capital (10 marks) Given the following information for Hung & Wong Transport, find the cost of capital. Assume the company's tax rate is 35 percent. Debt: 7,500, 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for 103 percent of par, the bonds make semiannual payments. Common stock: 195,000 shares outstanding, selling for $78 per share, beta is 1.21. Preferred stock: 11,000 shares of 6.35 percent preferred stock outstanding, currently selling for $76 per share. Market: 8 percent market risk premium and 5.1 percent risk-free rate. i) Calculate the market value of common stock, preferred stock, bond and the total market value of the firm. (2 marks) ii) Calculate the cost of common stock. (1 mark) iii) Calculate the cost of preferred stock. (1 mark) iv) Calculate the (i) before tax cost of the debt and (ii) after tax cost of debt. (2 marks) v) Calculate the weight of common stock (we), weight of preferred stock (w₂) and the weight of the debt (wo) in the total capital. (3 marks) vi) Calculate the weighted average of cost of capital (WACC). (1 mark)