Excel Problem 3 Show All Excel Work (21 points) The Pack Company has employed you to determine its weighted average cost of capital. Next year's sales revenue is projected to be $2,500,500. Variable costs are 44 percent of sales revenue and fixed costs are $745,000 per year. The marginal tax rate is 10%. Debt: Bond 1: 600,000 bonds valued at $1,150 with a coupon rate of 6.5 percent and matures in 20 years. Assume semi-annual coupon payments. Preferred Stock: 5,000,000 shares of 2.5 percent preferred selling at a price of $20. Common Equity: Pack has 11,250,000 shares of common stock selling for $45 per share. The firm's beta is 1.25. Floyd will pay a $2.00 dividend per share next year and expects the dividend growth rate to be 6 percent forever. Market: The expected return on the market is 15% and the risk free rate is 4.0 percent. Determine the weighted average cost of capital. Bond I Par Num of Bonds $1,000 600,000 $1,150 Bond Value CR 6.5096 Mat 20 years Semi-Ann Yes Preferred Stock Num of Shares Face Value 5,000,000 $100.00 Price $20.00 Div. Rate 0.025 Common Eq. Num of Shares Price 11,250,000 15.0% Market Mark. Ret. Risk-free Rate Tax Rate $45.00 4.00% Beta 1.25 40% D (1) 2. g 6.00%