7. XYZ estimates that if it issues new common stock, the flotation cost will be 15%. XYZ incorporates the flotation costs into the DCF approach. What is the estimated cost of newly issued common stock, considering the flotation cost?

% Flotation cost		15%
Net proceeds after flotation		$42.50

Cost of Newly Issued Common Stock=

8. What is XYZs overall, or weighted average, cost of capital (WACC)? Ignore flotation costs.

wd	30%	rd (1 T)	6.00%
wp	10%	rp	9.00%
wc	60%	rs	14.00%