1.Calculate the WACC for P&G given the following:

a)The company has outstanding debt that matures in 15 years that has a coupon of 5%.It pays interest semi-annually and the bonds are callable in 3 years at a 5% premium to par. The current price of the bonds is 1150.For a reference 15 year Treasuries are yielding 2.0%. (PG bonds are rated AA): Note: You need to figure out their approximate cost of borrowing and justify why you choose what you did.

b)P&G has outstanding preferred that have an 8% coupon, $100 par value and are currently priced at $120.If new preferred was issued the company would incur flotation costs of 5%.

c)The company's stock is currently priced at $100 and the current dividend is $4.00.That dividend is expected to grow at 3% forever.The beta of P&G is 0.6 and the RFR and MRP are 3% and 7% respectively.Ignore flotation costs for your cost of equity.

d)The target structure is 60% equity, 30% debt and 10% preferred.The tax rate is 40%.

e)If the company had no residual cash and new issued equity would incur a flotation cost of 20%.Calculate a new the WACC using only the DCF method for equity and keeping all other factors the same.Comment on your findings