单选题 A company has the following data associated with it:
A target capital structure of 10% preferred stock, 50% common equity and 40% debt.
Outstanding 20-year annual pay 6% coupon bonds selling for $894.
Common stock selling for $45 per share that is expected to grow at 8% and expected to pay a $2 dividend one year from today.
Their $100 par preferred stock currently sells for $90 and is earning 5%.
The company's tax rate is 40%.
What is the after tax cost of debt capital and after tax cost of preferred stock capital?
Debt Capital Preferred Stock Capital
①A. 4.2% 6.3%
②B. 4.5% 5.6%
③C. 4.2% 5.6%

• A. ①
• B. ②
• C. ③