Dillon Labs has asked its financial manager to measure the costof each specific type of capital as well as the weighted averagecost of capital (WACC). The WACC is to be measured by using thefollowing weights: 40% long-term debt, 10% preferred stock, and 50%common stock equity (retained earnings, new common stock, or both).The firm’s tax rate is 40%. Debt: The firm can sell for $1,020 a 10-year, $1,000-par-valuebond paying annual interest at a 7% coupon rate. A flotation costof 3% of the par value is required. Preferred stock: An 8% (annual dividend) preferred stock havinga par value of $100 can be sold for $98. An additional fee of $2per share must be paid to the underwriters. Common stock: The firm’s common stock is currently selling for$59.43 per share. The stock has paid a dividend that has graduallyincreased for many years, rising from $2.70 ten years ago to the $4dividend payment that the company just recently made. If thecompany wants to issue new common shares, it will sell them $1.50below the current market value to attract inves-tors, and thecompany will pay $2 per share in flotation costs. a. Calculate the after-tax cost of debt. b. Calculate the cost of preferred stock. c. Calculate the cost of common stock (both retained earningsand new common stock). d. Calculate the WACC for Dillon Labs.