9-16 (similar to) Question Help Cost of capital Edna Recording Studios, Inc., reported earnings available to common stock of $4,400,000 last year. From those earnings, the company paid a dividend of $1.24 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 40% debt, 20% preferred stock, and 40% common stock. It is taxed at a rate of 28%. a. If the market price of the common stock is 548 and dividends are expected to grow at a rate of 6% per year for the foreseeable future, what is the company's cost of retained earnings financing? b. If underpricing and flotation costs on new shares of common stock amount to S9 per share, what is the company's cost of new common stock financing? c. The company can issue $1.96 dividend preferred stock for a market price of $26 per share. Flotation costs would amount to $4 per share. What is the cost of preferred stock financing? d. The company can issue $1,000-par-value, 7% coupon, 5-year bonds that can be sold for $1,130 each. Flotation costs would amount to S20 per bond. Use the estimation formula to figure the approximate after-tax cost of debt financing? e. What is the WACC? a. If the market price of the common stock is 548 and dividends are expected to grow at a rate of 6% per year for the foreseeable future, the company's cost of retained earnings financing is % (Round to two decimal places.)