Use the forecasting variables below to complete the Weighted Average cost of capital WACC at different break points. use the same WACC that you calculated on this sheet for all years and we are using the highest time. Preferred stock is issued but some is not yet outstanding (so no flotation preferred)

WACC facts Barking Dog Corp Cost of Capital Given: Optimal Capital Structure 25% Debt 10% Preferred Equity 65% Common Equity Net income for the coming year $4,000,000 Use Retained Earnings for common equity until completely exhausted for that year (don't spend previous year's RE) Dividends policy is to distribute 60% of annual Nias dividends Current RE are o 30% Tax rate Borrowire Limits and Interest Rates Amount Borrowed Oto $400,000 over $400,000 Interest Rate BX 12% Preferred Stock price: Common Stock price D E Float $60 $5 for the coming year 7 $36 SA for the coming year Component costs of capital After tax cost of debt, ATK (1) per AT 1.TR) up to $400,000 borrowed After tax cost of debt, ATK (2) per ATT (1) if over $400,000 borrowed Cost of Preferred Stock per the dividend growth model Cost of existing equity (RE). per the dividend growth model and CAPM Cost of new equity, per the dividend growth model and CAPM 6. MCC break points Debe break point based on 25% debt financire Equity break point Net Income Dividends RE available Breakpoint based on 65% common equity franare c. Mcc figures, using higher rates for equity and debt when past break point: WACC up to ist breakpoint Marral CC between 1st & 2nd break points Uses higher costs of detit Margral CC after 2nd breakpoint Uses higher costs of capital WACC facts Barking Dog Corp Cost of Capital Given: Optimal Capital Structure 25% Debt 10% Preferred Equity 65% Common Equity Net income for the coming year $4,000,000 Use Retained Earnings for common equity until completely exhausted for that year (don't spend previous year's RE) Dividends policy is to distribute 60% of annual Nias dividends Current RE are o 30% Tax rate Borrowire Limits and Interest Rates Amount Borrowed Oto $400,000 over $400,000 Interest Rate BX 12% Preferred Stock price: Common Stock price D E Float $60 $5 for the coming year 7 $36 SA for the coming year Component costs of capital After tax cost of debt, ATK (1) per AT 1.TR) up to $400,000 borrowed After tax cost of debt, ATK (2) per ATT (1) if over $400,000 borrowed Cost of Preferred Stock per the dividend growth model Cost of existing equity (RE). per the dividend growth model and CAPM Cost of new equity, per the dividend growth model and CAPM 6. MCC break points Debe break point based on 25% debt financire Equity break point Net Income Dividends RE available Breakpoint based on 65% common equity franare c. Mcc figures, using higher rates for equity and debt when past break point: WACC up to ist breakpoint Marral CC between 1st & 2nd break points Uses higher costs of detit Margral CC after 2nd breakpoint Uses higher costs of capital