1. The target capital structure of the firm is: Bond 30% P/S 20% C/E 50% 100% Add the following items to your information set above: a) Projected retained earnings is $6 million b) All bonds can be raised at 10% YTM. Applicable tax rate is 40%. c) An unlimited amount can be raised through preferred at 12% yield to investors (f=5%) d) Common stock: expected long-term growth is 6%, Do is $2, current stock price is $20.00. e) The floatation cost for new common stocks is 10%. A. Show the breaking points below: Breaking Points Because of the increase in this component cost B. Show your component cost computation and fill in the blanks below: Ko is: Kps is: Kreis: Kocs is: C. Show below your WACC computation for each interval (use the market value weight you computed above) by filling in the blanks in the table: Component Weight $0 to $ Over $ Debt Preferred Stock Common Stock MCC D. MCC Schedule COC (%) $ Capital 1. The target capital structure of the firm is: Bond 30% P/S 20% C/E 50% 100% Add the following items to your information set above: a) Projected retained earnings is $6 million b) All bonds can be raised at 10% YTM. Applicable tax rate is 40%. c) An unlimited amount can be raised through preferred at 12% yield to investors (f=5%) d) Common stock: expected long-term growth is 6%, Do is $2, current stock price is $20.00. e) The floatation cost for new common stocks is 10%. A. Show the breaking points below: Breaking Points Because of the increase in this component cost B. Show your component cost computation and fill in the blanks below: Ko is: Kps is: Kreis: Kocs is: C. Show below your WACC computation for each interval (use the market value weight you computed above) by filling in the blanks in the table: Component Weight $0 to $ Over $ Debt Preferred Stock Common Stock MCC D. MCC Schedule COC (%) $ Capital