Choose the Correct Answer Questions 1 through 9 relate to the following problem: Daves Inc. recently hired you as a consultant to estimate the company's WACC. You have obtained the following information. . The firm has $400,000 of debt outstanding, $200,000 of preferred stock, $300,000 of retained earnings and $300,000 of new common stock The firm's bonds mature in 20 years and have a 10% yield to maturity. The company's tax rate is 40% The firm's preferred stock currently sells for $80 a share and pays an annual dividend of $11. The firm is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $52.50 a share. The issuance of new common stock would incur the firm 6% flotation cost. . . 7. The cost of common equity using retained earnings is: O A. 13.75% OB. 10% C. 10.26% O D. 10.57% O E. None of the above 8. The cost of external equity is: * O A. 13.75% O B. 10.26% O C.6% O D. 10.57% O E. None of the above 9. The Weighted Average Cost of Capital (WACC) is: * O A. 19.50% O B. 10.29% C. 9.50% D. 15