2. Growth Companys current share price is $20 and it is expected to pay a $1 dividend per share next year. After that, the firms dividends are expected to grow at a rate of 4% per year.

a. What is an estimate of Growth Companys cost of equity?

b. Growth Company also has preferred stock outstanding that pays a $2 per share fixed dividend. If this stock is currently priced at $28, what is Growth Companys cost of preferred stock?

c. Growth Company has existing debt issued three years ago with a coupon rate of 6%. The firm just issued new debt at par with a coupon rate of 6.5%. What is Growth Companys pretax cost of debt?

d. Growth company has 5 million common shares outstanding and 1 million preferred shares outstanding, and its equity has a total book value of $50 million. Its liabilities have a market value of $20 million. If Growth Companys common and preferred shares are priced as in parts (a) and (b). what is the market value of Growth Companys assets?

e. Growth Company faces a 35% tax rate. Given the information in parts (a) through (d), and your answers to those problems, what is Growth Companys WACC?