Calculating the WACC \begin{tabular}{lr} Skye Computer Company: Balance Sheet as of December 31 \\ \cline { 2 - 2 } (in thousands of dollars) & 2021 \\ \cline { 2 - 2 } & $1,750 \\ Current assets & 3,250 \\ \hline Net fixed assets & $0 \\ \hline Total assets & $700 \\ & 100 \\ \hline Accounts payable and accruals & 1,325 \\ Short-term debt & 475 \\ Long-term debt & 1,175 \\ Preferred stock & 1,225 \\ \hline Common stock & $0 \\ \hline Retained earnings & $0 \\ \hline Total common equity & \\ \hline Total liabilities and equity & $3.05 \\ \hline & $50.00 \\ \hline Last year's earnings per share & $2.05 \\ Current price of common stock, P0 & 10% \\ \hline Last year's dividend on common stock, D0 & 11% \\ \hline Growth rate of common dividend, g & 50,000 \\ Flotation cost for common stock, F & $35.00 \\ Common stock outstanding & $3.15 \\ \hline Current price of preferred stock, Pp & 15,000 \\ \hline Dividend on preferred stock, Dp & 10% \end{tabular} \begin{tabular}{|l|r|} \hline Market risk premium, rMrRF & 4% \\ \hline Risk-free rate, rRF & 5% \\ \hline Beta & 1.774 \\ \hline Tax rate & 25% \\ \hline Total debt & $1,425 thousand \\ \hline \end{tabular} equity. After-tax cost of debt: Cost of preferred stock: % Cost of retained earnings: % Cost of new common stock: % 3% b. Now calculate the cost of common equity from retained earnings, using the CAPM method. % 3% WACC 1 : 3% WACC 2 : 3% Excel Activity: Cakulating the WACC Here is the condensed 2021 balance sheet for Skye Computer Company (in thousands of dollars): equals $1.425 million