3 Given:. Equity (old common stock only) 20.5 million shares outstanding Current stock price is $100.00/share Dividends expected at $2.00/share growing at 4%/yr Flotation cost at $0.50/share for new shares Preferred Stock (new) 5 million share outstanding Current shares priced is $90.00/share Dividents at $2.00/share Flotation costs at $0.50/share for new shares Debt 1 million par value outstanding in cumulative bonds 2 years left to maturity Annual coupons at coupon rate of 4% Current price would be 98% of par value Flotation cost for new bonds would be 2% of par value Tax rate of 28% WACC: proportional weight Common Equity. Preferred Equity Debt before tax cost of: Equity Preferred Equity Debt PV = FV = Before Tax WACC n = Common Equity. Preferred Equity Debt Total before tax pmt = i/yr = ? (which is BT cost of debt) After Tax WACC Common Equity. Preferred Equity Debt Total after tax