Market Capitalization: $$50\mathrm{.}236$ billion

Book Value of Long$-$Term Debt: $$18,777,000$

Book Value of Preferred Stock: N$/$A

Cost of Equity: $-0\mathrm{.}0807-8\mathrm{.}07\%$

Interest Expense: $524,000($in thousands$)$

Tax Provision: $922,000($in thousands$)$

Pre$-$Tax Income: $4,554,000($in thousands$)$

O Use the book value of long$-$term debt as the debt value $(D),$ and the book value of

preferred stock as the preferred stock value $($Pref$).$

$$ Before$-$tax cost of debt: Divide "Interest Expense for Long Term Debt And

Capital Securities" by debt. Use "Interest Expense" if "Interest Expense for Long

Term Debt And Capital Securities" is unavailable.

$$ Tax rate: Divide "Tax Provision" by "Pretax Income"

$$ Cost of preferred stock: Use the dividend yield of the preferred stock $($due to the

zero$-$flotation assumption$),$ i$.$e$.,$ divide "Preferred Stock Dividends" by the

preferred stock value. Note not every company issues preferred stock, so this

component can be absent$.$

$$ Cost of common equity: Use the required return on the stock $(rs)$

$$ Weight of capital components $("$capital structure"$)$

$$ The weights of debt, of preferred stock, and of common stock are $\frac{D}{?}$

Pref $+S,$ Prefl $(D+$Pref$+S),$ and Pref $+S,$ respectively, where $S$

is the market capitalization of common equity.

Calculate the weighted average cost of capital.

Should the capital component costs be figured on a before$-$tax or after$-$tax basis? Why?

Which component is affected?

Should the capital component costs be historical costs or new $($marginal$)$ costs? Why?

Report the cost of each capital component and explain how you arrive these numbers.

Report the weighted average cost of capital of the company and explain how you arrive

it$.$

Qualitatively discuss how would positive flotation costs affect the cost of capital.