BUSINESS CALCULATOR ONLY!

Nero Company currently has a capital structure made up of debt, preferred stock and common stock. They are in the process of issuing more common stock and selling more bonds. Bond #1 is an existing bond that is selling for $940 and has a $1,000 par, 5.5% rate and 12 years to maturity. Float costs are 2% of the market price new bonds. It will pay interest on an annual basis. Bond #2 is a new bond that is currently selling for $945 and has a $1,000 par, 5.0% rate and 20 years to maturity. Float costs are 2% of the market price new bonds. It pays interest on an annual basis. Preferred stock is new and selling for $102 per share, with a $100 par value and an 8% dividend rate. Float cost are 1.5% of the market price with new issues. Common stock is currently selling for $50 and will pay an expected dividend of $1.05. Investors expect a 9% growth rate on this stock. The new stock has a 2.5% float cost associated with it. Determine the weighted average cost of capital for the Nero Company using the chart below and the above/below information. Nero has a 35% tax rate and the following market values per each security: AT Cost WACC Bond #1 Bond #2 Preferred Stock Existing Common Stock New Common Stock $12,000,000 18,000,000 10.000.000 49,000,000 11,000,000