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Calculate the firms WACC (weighted average cost of capital) assuming that internally generated equity will satisfy next years common equity needs. In your solution, in

Calculate the firms WACC (weighted average cost of capital) assuming that internally generated equity will satisfy next years common equity needs. In your solution, in addition to the calculation for WACC, please also show your supporting calculations for the following:

  • capital component weights
  • cost of debt
  • cost of preferred stock
  • cost of common equity

You must type in both the answer and all of your work to receive credit.

Be sure to use 4 decimal places (25.25% or 0.2525).

Current assets 3,100 growth rate 7.50%
Property, plant & equip 3,400 coupon on new bonds 7.75%
Total assets 6,500 corporate tax rate 25.00%
dividend on preferred 8.00%
Current liabilities 1,500 price of common $24.00
Long-term debt 1,800 price of $100 par value preferred $75.00
Preferred stock, $100 par 500 anticipated common dividend $1.65
Common stock, no par 1,200 flotation costs on preferred $4.00
Retained earnings 1,500 flotation costs on common $2.50
Total liabilities & equity 6,500

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