Calculate the WACC for PG given the following:

a. The company has outstanding debt that matures in 15 years that has a coupon of 5%. It pays interest semi-annually and the bonds are callable in 3 years at a 5% premium to par. The current price of the bonds is 1120. For a reference 15-year Treasuries are yielding 2.5%. (PG bonds are rated AA)

b. PG has outstanding preferred that have an 8% coupon, $100 par value and are currently priced at $120. If new preferred was issued the company would incur flotation costs of 5%.

c. The companys stock is currently priced at $100 and the expected dividend is $4.00. That dividend is expected to grow at 3% forever. The beta of PG is 0.6 and the RFR and MRP are 3% and 7% respectively. Ignore flotation costs for your cost of equity.

d. The target structure is 60% equity, 30% debt and 10% preferred. The tax rate is 40%.

e. If the company had no residual cash and new issued equity would incur a flotation cost of 20%. Calculate anew the WACC using only the DCF method for equity and keeping all other factors the same. Comment on your findings.