19 Preferred stock from Allsports Inc. sells for $86.75 per share, and it pays an $7.75 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? 20 Monroe Inc. has the following data: rRF = 5.25%; RP M= 6.50%; and b = 1.25. What is the firm's cost of common from reinvested earnings based on the CAPM? 21 As a consultant to Cocco Inc., you have been provided with the following data: D1 = $0.75, PO = $26.80. and gL = 7.00% (constant). What is the cost of common from reinvested earnings based on the dividend growth approach? 22 As the assistant to the President of Roosevelt Industries, you are asked to estimate its cost of common equity. You have been provided with the following data: DO = $0.65, PO = $24.75 and gL = 6.5% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings? 23 Bartlett Company's target capital structure is 50% debt, 10% preferred, and 40% common equity. The after-tax cost of debt is 6.25%, the cost of preferred is 7.0%, and the cost of common using reinvested earnings is 11.85%. The firm will not be issuing any new stock. You were hired as a consultant to help determine their cost of capital. What is the WACC for Bartlett Company? 24 Safeway Incorporated's stock trades for $53.45 per share. It is expected to pay a $2.75 dividend at year end (D1 = $2.75), and the dividend is expected to grow at a constant rate of 6.25% a year. The before-tax cost of debt is 6.75%, and the tax rate is 35%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC? 25 Eastway Incorporated is considering a project that has the following cash flow and cost of capital (r) data. What is the project's NPV and IRR? 26 The Bushwick Corp.is considering a project that has the following cash flow and cost of capital (r) data. What is the project's NPV, IRR and Regular Payback