Balance sheet data for Bollins Green Corp (BGC) are given below 10 ASSETS Cash Acc. Rec. Inventories C.A. Net Fixed Assets Total Assets (million of $) 10 20 20 50 50 100 LIABILITIES Acc. Pay. Accruals 10 Notes 5 C.L. 25 L-t. debt 30 Preferred 5 Common 10 R.E. 30 Total 100 Calculate BGC's WACC (assuming that RE and new common equity are used) given the fol- lowing. The firm is unwilling to issue more notes, hence all fundraising has to be done with long-term debt, preferred stock, common stock, and RE. a) Investment bankers estimate that a new, 15-year bond issue can be sold for $795.99. It would have a par of $1,000 and carry an annual coupon of $90. b) BGC new preferred is expected to pay a fixed annual dividend of $11 and have a face value of $100. A floatation cost of 5% is required c) The company's stock has a market price of $20 and the current annual dividend is $1. The rate of growth in ROE has been 24 percent and the firm has a policy of retaining 50% of profits. However, next year the firm expects to accomplish a 30% ROE and maintain it for the foreseeable future. Also, the expected floatation cost of new com- mon is 10%. d) The firm is in the 40% tax bracket. e) BGC considers the present capital structure to be the best. It plans on retaining it in the future, too