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3. KrugerIndustrial Smoothing has a target capital structure consisting of30% debt, 5% preferred stock, and 65% common equity. Kruger has20-year, 7.25% semiannual coupon bonds that are selling for $875.Kruger’s preferred stock sells for $95 and pays a 9% dividend on a$100 par value. Kruger is a constant growth firm with a growth rateof 4% and just paid a dividend of $2.35 on its common stock that iscurrently selling for $30.00 per share. The beta is 1.25 and therisk free rate is 5.25%. The required return on the stock market is11.50%. The firm’s marginal tax rate is 40%. a. What isKruger’s component after-tax component cost of debt? b. What isKruger’s component cost of preferred stock? c. What isKruger’s component cost of common equity based on the CAPM? d. What isKruger’s component cost of common equity based on the DCFmodel? e. What isthe WACC for Kruger assuming the firm use an average component costof equity given the two methodsused?