Start with the partial model in the file Ch11 P18 Build a Model.xlsx. The stock of Computing sells for $70, and last year's dividend was $3.96Security analysts are projecting that the common dividend will grow at a rate of % a yearA flotation cost of 11% would be required to issue new common stock. Gao's preferred stock sells for $32.26, pays a dividend of $3.30 per share, and new preferred stock could be sold with a flotation cost of 7%The firm has outstanding bonds with 15 years to maturity, an 11% annual coupon rate, semiannual payments, and $1,000 par value. The bonds are trading at $1,259.38. The tax rate is 25%The market risk premium %the risk-free rate is 5.5%, and Gao's beta is 1.3In its cost-of-capital calculations, Gao uses a target capital structure with 45% debt, 5% preferred stockand 50% common equity The data has been collected in the Microsoft Excel file belowDownload the spreadsheet and perform the required analysis to answer the questions belowDo not round intermediate calculationsRound your answers to two decimal places

Start with the partial model in the file Ch11 PI8 Build a Model, x/5x. The stock of Gap Camputing sells for $70, and last year's dividend was $3.96. Secunity analysts are projecting that the common dividend will grow at a rate of 6% a yeat. A flotation cost of 119 would be required to issue new common-sfock. Gao's preferred stock. sells for $32.26, pays a dividend of $3.30 per share, and new preferred stock could be sold with a flotation cost of 7%. The firm has outstanding bonds with 15 years to matunty, an 11% annual coupon rate, semiannual payments, and $1,000 par value. The bonds are trading at $1,259.38. The tax rate is 25%. The market risk premium is 5%, the risk-free rate is 5.5%, and Gao's beta is 1.3. In its cost-of-capital calculations, Gao uses a target capital structure with 45% debe, 5% preferred stock, and Saw common equaty. The data has been collected in the Microsoft Excel file below. Downioad the spreadaheet and perform the required analysis to answer the questions below. Do not round intermediate calculations, Round your answeis to two decimal places. Downhad seireidatheet Chit. P18 build a Model.28642a.visk a. Calculote the cost of ench capital component-in other words, the after-tax cost of debt, the cost of prelerred stock (including flotation mats), and the cost of equity (ognoning flotation costs). Use beth the CAPM methed and the dividend growth appronch to find the cost of equity. b. Calculate the cont of new stock using the dividend qrowth approach b. Calculate the cost of new stock using the dividend growth approach. c. Assuming that Gao will not issue new equity and will continue to use the same target capital structure, what is the company's WACC? WACC \begin{tabular}{lr} Current price of common stock, P0 & $70.00 \\ Last year's dividend on common stock, D0 & $3.96 \\ \hline Growth rate of common dividend, g & 6% \\ Flotation cost for common stock & 11% \\ \hline Current price of preferred stock, Pps & $32.26 \\ \hline Preferred dividend, Dps & $3.30 \\ \hline Flotation cost for preferred stock & 7% \\ Bond's years to maturity & 15 \\ Number of coupon payment per year & 2 \\ Annual coupon rate & 11% \\ Par value & $1,000.00 \\ Bond price & $1,259.38 \\ Tax rate & 25% \\ Market risk premium, RP MM & 5.0% \\ Beta & 5.5% \\ Weight of long-term debt, wd & 1.3 \\ Weight of preferred stock, wps & 45% \\ Weight of common stock, ws & 5% \\ \hline \end{tabular}