Problem 1 (each part is ½ point) Rollins Corporation is estimating its weighted average cost of capital (WACC). Its target capital structure is 30% debt, 20% preferred stock and 50% common equity. A. Rollins bonds will have a coupon rate of 12%, a par value of $1,000 and 20 years to maturity. The price of the bond is $1,244.03 B. The firm can sell a preferred stock with a dividend of $10. The price of the preferred stock is $80 per share. C. Rollins beta is 2, the risk free rate is 1% and the market risk premium is 8%. D. Rollins last dividend was $2, a growth rate of 10% and common stock is priced at $22. E. Rollins can sell new common stock for $22 per share. F. Tax rate is 40%.