2) Refer to the data sheet WACC from BlackBoard. Find the following: a) After Tax cost of debt below $1 million. b) After Tax cost of debt above $1 million. c) Cost of preferred stock d) Cost of internal equity (RE) using Dividend Growth model. e) Cost of internal equity using CAPM. f) Composite (average) cost of internal equity. g) Cost of new equity. h) Dividends. i) RE available for the year, given the dividends policy. Income tax rate Assumed long-term sustainable growth rate 25% 4% WACC facts: Barking Dog Corp Cost of Capital Given: Optimal Capital Structure: 25% Debt 15% Preferred Equity 60% Common Equity Net income for the coming year: $3,500,000 Use Retained Earnings for common equity until all but SI M are exhausted. Dividends policy is to distribute 60% of Nl as dividends. Currently retained carings Borrowing Limits and Interest Rates: Amount Borrowed Interest Rats 0 to $1,000,000 5% over $1,0000,000 Preferred Stock price: DPO: $30 $2 for this year Use the average of CAPM and Dividends growth model for rRE Common Stock price SSO DO: $5 for the coming year 496 Float 10% of the market price Tax rate: 25% For CAPM: IM 8.5% TRE 2.5% B 1.25 Component costs of capital: per AT Kd - BT KD) up to $1,000,000 borrowed per AT kd-BTk.IT) if over 1,000,000 borrowed After-tax cost of debt. AT (1) After-tax cost of debt, AT rd (2) Cost of Preferred Stock, P Using DCF Cost of existing equity (RE).RE Using CAPM Cost of existing equity (RE), TRE Composite (average) TRE Cost of new equity, m per the dividend growth model per CAPM per the dividend growth model 3.500,000.00 Net Income Dividends RE available, retaining SIM