Ch$\mathrm{.}9$ Q$3-$ Question

WACC Current price of common stock, Po Last years dividend on common stock, Growth rate of common dividend, Flotation cost for common stock Current price of preferred stock, P Preferred dividend, Dps Flotation cost for preferred stock Bond's years to maturity Number of coupon payment er Annual cou on rate Par value Bond price Tax rate Market risk premium, RPM Rsk-free rate, rRF Beta Weight of long-term debt, Wd Weight of preferred stock, w Weight of common stock, Ws ar $60.00 $2.83 6% 10% $32.26 $3.60 7% 25 2 $1 ,ooo.oo $915.34 25% 5.0% 5.5% 1.1 15% a. Calculating the cost Of each capital component Annual before-tax cost of debt After-tax cost of debt Cost of preferred stock (including flotation costs) Cost of common equity, dividend growth approach (ignoring flotation costs) Cost Of common b. Calculating the cost of new stock using the dividend growth approach Cost Of new stock, dividend growth approach c. Calculating the company's WACC if Gao will not issue new equity and will continue to use tie sal WACC a. b. Calculate the cost of each capital componentin other words, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost Of equity (ignoring flotation costs). use both the CAPM method and the dividend growth approach to find the cost Of equity. After-tax cost of debt Cost of preferred stock (including flotation costs) Cost of common equity, dividend growth approach (ignoring flotation costs) Cost Of common equity, CAPM Calculate the cost Of new stock using the dividend growth approach. 0/0 Assuming that Gao will not issue new equity and will continue to use the same target capital Structure, what is the company's WACC?