a$.$ Calculate the after$-$tax cost of debt.

Price per bond $$1,020$

Time to maturity $($years$)10$

Par value per bond $$1,000$

Coupon rate $7\%$

Flotation cost per bond $3\%$

Tax rate $21\%$

Before$-$tax cost of debt

After$-$tax cost of debt

b$.$ Calculate the cost of preferred stock.

Price per share $$98$

Par value per share $$100$

Underwriter discount per share $$2\mathrm{.}00$

Annual dividend $8\%$

Dividend payment

Proceed from sale

Cost of preferred stock

c$.$ Calculate the cost of common stock of retained earnings.

Price per share $$59\mathrm{.}43$

Dividend growth rate $4\%$

Projected dividend per share next year $$4\mathrm{.}16$

Underpricing per share $$1\mathrm{.}50$

Flotation cost per share $$2\mathrm{.}00$

Cost of retained earnings

d$.$ Calculate the WACC for UVU Aviation.

After$-$tax cost of debt $0\%$

Weight of debt $0\mathrm{.}40$

Cost of preferred stock $0\%$

Weight of preferred stock $0\mathrm{.}10$

Cost of retained earnings $0\%$

Weight of retained earnings $0\mathrm{.}50$

WACC using retained earnings

e$.$ Explain the marginal cost of capital for this firm and investment implications.