(20 pts) Flush Club has 75,000 shares of common stock outstanding at a market price of $20 a share. The common stock will pay a $1.80 annual dividend next year and has a dividend growth rate of 3.5 percent. There are 18,000 shares of preferred stock (which pay a $2 dividend) outstanding at a market price of $25 a share. The outstanding 9.15 percent coupon bonds (semi-annual compounding, $1,000 Face Value) mature in 12 years, have a total face value of $1,000,000; and a market price of $1,050 each. The tax rate is 21 percent.

(a) What is the Cost of Capital of the Common Stock (R_E)? _____________ PERCENT

(b) What is the Cost of Capital of the Preferred Stock (R_P)? ______________ PERCENT

(c) What is the Cost of Capital of the Debt (R_D)? _______________ PERCENT

(d) What is the Market Value of the Common Stock (E)? $ _______________

(e) What is the Market Value of the Preferred Stock (P)? $ _______________

(f) What is the Market Value of the Debt (D)?

(Not the face value, but the current market value!) $ _______________

(g) What is the total Market Value of the firm (V)? $ _______________

(h) What is the Weighted Average Cost of Capital (WACC)? _______________ PERCENT