Back to Assignment Attent Keep the Highest: /2 5. The cost of Capital Cost of New Common Stech If a firm plans tout new stock, Totation costs (Investment Bankersfees) should not be ignored. There are two approaches to use to account for fotation costs. The first approach is to add the son of flotation costs for the debt, preferred, and common stock and add them to the initial Investment com. Because the investment couts increased, the project's expectorate of retums reduced to it may not meet the firm's handle rate for acceptance of the project. The second approach involves adjusting the cost of common culty as follows Cont of equity from new stocks The difference between the notation ajusted cost of equity and the cost of outy calculated without the flotation actment represents the Motion cost ajustment Quantitative Problem Barton Industries expects next year's annua dividend, D. to be $2.20 and it expects dividends to grow it a constant rate 5. The firm's current common stock price, P. Is 120.00 Il needs to wwe now common to the firm wil encounter 4. Matation cout, wat is the location cost adjustment that must be added to its cost of retained earnings? Do not round istemedett calculation Round your answer to two decimal places What is the cout new common equity considering the estimate made from the three estimation methodologies? Do not found intermediate calculators. Hound your answer to two decimal place more often than hal Quantitative Probleme years ago, Berton Industries issued 25-year noncalable, semiannual bonds with a $1.000 face value and coupon, semiannual payment (145 payment every 5 months). The bonds currey sell for 1844.87. If the firm's marginal tax rate is 25, what is the firm'ferta com o obt? Do not und intermediate calculation, Hound your answer to two decimal Q Allum Keep the Highest 12 6. 6: The cost of capital Weighted Average cost of capital The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm is to raise funds for its future projects. The target proportions of debt, preferred stock, and common culty. along with the cost of these components, are used to calculate the w's weighted average cost of capital (WACC), the tem wil have to have common stock, then the cost of retarder is used in the firm's WACC C. However, the firm will have to sto new common stock, the cost of new common stock should be used in the firm's WACC calculation Quantitative Problemi Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40 dett, preferred Mods, and 55% common cauity Note that the forms anal tax rate is 25. Assume that the firm's cost of debt. 9.9. the forma cost of preferred to send the firm's cost of equity is 12.1 for old outy, and 12.7% for new souty. What is the firm's weighted werage cost of capital (WACC) uses retained earnings as its source of common equity? Do not round intermediate calculations. Round your answer to two decimal places What is the firm's weighted average cost of capital (WACC) it has to new common stock? Do not found intermediate calculations. Round your answer to two decimal places Back to Assignment Attent Keep the Highest: /2 5. The cost of Capital Cost of New Common Stech If a firm plans tout new stock, Totation costs (Investment Bankersfees) should not be ignored. There are two approaches to use to account for fotation costs. The first approach is to add the son of flotation costs for the debt, preferred, and common stock and add them to the initial Investment com. Because the investment couts increased, the project's expectorate of retums reduced to it may not meet the firm's handle rate for acceptance of the project. The second approach involves adjusting the cost of common culty as follows Cont of equity from new stocks The difference between the notation ajusted cost of equity and the cost of outy calculated without the flotation actment represents the Motion cost ajustment Quantitative Problem Barton Industries expects next year's annua dividend, D. to be $2.20 and it expects dividends to grow it a constant rate 5. The firm's current common stock price, P. Is 120.00 Il needs to wwe now common to the firm wil encounter 4. Matation cout, wat is the location cost adjustment that must be added to its cost of retained earnings? Do not round istemedett calculation Round your answer to two decimal places What is the cout new common equity considering the estimate made from the three estimation methodologies? Do not found intermediate calculators. Hound your answer to two decimal place more often than hal Quantitative Probleme years ago, Berton Industries issued 25-year noncalable, semiannual bonds with a $1.000 face value and coupon, semiannual payment (145 payment every 5 months). The bonds currey sell for 1844.87. If the firm's marginal tax rate is 25, what is the firm'ferta com o obt? Do not und intermediate calculation, Hound your answer to two decimal Q Allum Keep the Highest 12 6. 6: The cost of capital Weighted Average cost of capital The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm is to raise funds for its future projects. The target proportions of debt, preferred stock, and common culty. along with the cost of these components, are used to calculate the w's weighted average cost of capital (WACC), the tem wil have to have common stock, then the cost of retarder is used in the firm's WACC C. However, the firm will have to sto new common stock, the cost of new common stock should be used in the firm's WACC calculation Quantitative Problemi Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40 dett, preferred Mods, and 55% common cauity Note that the forms anal tax rate is 25. Assume that the firm's cost of debt. 9.9. the forma cost of preferred to send the firm's cost of equity is 12.1 for old outy, and 12.7% for new souty. What is the firm's weighted werage cost of capital (WACC) uses retained earnings as its source of common equity? Do not round intermediate calculations. Round your answer to two decimal places What is the firm's weighted average cost of capital (WACC) it has to new common stock? Do not found intermediate calculations. Round your answer to two decimal places