a$.$ Calculate the cost of each capital component, that is$,$ the after$-$tax cost of debt, the cost of preferred stock $($including flotation costs$),$ and the cost of equity $($ignoring flotation costs$).$ Use both the the CAPM method and the dividend growth approach to find the cost of equity.

Cost of debt:

N $=40$

PMT $=$ $$60\mathrm{.}00$

PV $=-$$$1,171\mathrm{.}59$

FV $=$ $$1,000\mathrm{.}00$

Semiannual yield $=$ RATE $=5\mathrm{.}00\%$

Annual B$-$T rd $=0\mathrm{.}10\%$

B$-$T rd $\backslash$times $(1$ T$)=$ A$-$T rd

$0\%0\%=0\mathrm{.}11\%$

Cost of preferred stock $($including flotation costs$)$:

Dpf $/$ Net Ppf $=$ rpf

$$0\mathrm{.}11=$

Cost of common equity, dividend growth approach $($ignoring flotation costs$)$:

D$1/$ P$0+$ g $=$ rs

Cost of common equity, CAPM:

rRF $+$ b $\backslash$times RPM $=$ rs

$=$

b$.$ Calculate the cost of new stock using the dividend growth approach $($include flotation costs$).$

D$0\backslash$times $(1+$ g$)/$ P$0\backslash$times $(1$ F$)+$ g $=$ re

c$.$ Assuming that Gao will not issue new equity and will continue to use the same capital structure, what is the company's WACC?

wd $45\mathrm{.}0\%$

wpf $5\mathrm{.}0\%$

ws $50\mathrm{.}0\%$

$100\mathrm{.}0\%$

wd $\backslash$times A$-$T rd $+$ wpf $\backslash$times rpf $+$ ws $\backslash$times rs $=$ WACC

$=$