P0 $65.00

D0 $2.53

g 9%

Flotation cost for common 12%

Ppf $42.00

Dpf $3.32

Flotation cost for preferred 10%

Bond maturity 25

Payments per year 2

Annual coupon rate 15%

Par $1,000.00

Bond price $1,271.59

Tax rate 20%

Beta 1.2

Market risk premium, RPM 5.5%

Risk free rate, rRF 7.0%

Target capital structure from debt 40%

Target capital structure from preferred stock 10%

Target capital structure from common stock 50%

b, Calculate the cost of new stock using the dividend growth approach.

c. Assuming that Matrix will not issue new equity and will continue to use the same tar-get capital structure, what is the company's WACC