Calculation of individual costs and WACC Lang Enterprises is interested in measuring its overall cost of capital. Current investigation has gathered the following data. The firm is in the 27% tax bracket.

Debt The firm can raise debt by selling $1 comma 0001,000-par-value, 7% coupon interest rate, 16-year bonds on which annual interest payments will be made. To sell the issue, an average discount of $45 per bond would have to be given. The firm also must pay flotation costs of $30 per bond. Preferred stock The firm can sell 7% preferred stock at its $95-per-share par value. The cost of issuing and selling the preferred stock is expected to be $8 per share. Preferred stock can be sold under these terms.

Common stock The firm's common stock is currently selling for $55 per share. The firm expects to pay cash dividends of $8 per share next year. The firm's dividends have been growing at an annual rate of 5%, and this growth is expected to continue into the future. The stock must be underpriced by $7 per share, and flotation costs are expected to amount to $4 per share. The firm can sell new common stock under these terms.

Retained earnings When measuring this cost, the firm does not concern itself with the tax bracket or brokerage fees of owners. It expects to have available $150000 of retained earnings in the coming year; once these retained earnings are exhausted, the firm will use new common stock as the form of common stock equity financing.

a.Calculate the after-tax cost of debt.

b.Calculate the cost of preferred stock.

c.Calculate the cost of common stock.

d.Calculate the firm's weighted average cost of capital using the capital structure weights shown in the following table,(Round answer to the nearest 0.01%)

x Do Homework - Meshari Alcantani - Google Chrome mathxl.com/Student/PlayerHomework.aspx?homeworkld=5570870708 questionld=1&flushed=false&cld=58966918.centerwin=yes Financial Management Meshari Alqahtani | 04/30/20 7:51 AM Homework: Homework ch 9 Save Score: 0 of 1 pt 1 of 1 (0 complete) HW Score: 0%, 0 of 1 pt P9-19 (similar to) i Question Help Calculation of individual costs and WACC Lang Enterprises is interested in measuring its overall cost of capital. Current investigation has gathered the following data. The firm is in the 27% tax bracket Debt The firm can raise debt by selling $1,000-par-value, 7% coupon interest rate, 16-year bonds on which annual interest payments will be made. To sell the issue, an average discount of $45 per bond would have to be given. The firm also must pay flotation costs of $30 per bond. Preferred stock The firm can sell 7% preferred stock at its 595-per-share par value. The cost of issuing and selling the preferred stock is expected to be S8 per share. Preferred stock can be sold under these terms. Common stock The firm's common stock is currently selling for $65 per share. The firm expects to pay cash dividends of $8 per share next year. The firm's dividends have been growing at an annual rate of 5%, and this growth is expected to continue into the future. The stock must be underpriced by S7 per share, and flotation costs are expected to amount to S4 per share. The firm can sell new common stock under these terms. Retained earnings When measuring this cost, the firm does not concern itself with the tax bracket or brokerage fees of owners. It expects to have available $150,000 of retained earnings in the coming year: once these retained earnings are exhausted, the firm will use new common stock as the form of common stock equity financing. a. Calculate the after-tax cost of debt. b. Calculate the cost of preferred stock c. Calculate the cost of common stock. d. Calculate the firm's weighted average cost of capital using the capital structure weights shown in the following table - (Round answer to the nearest 0.01%) a. The after-tax cost of debt using the approximation formula is % (Round to two decimal places.) i Data Table - X (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Source of capital Long-term debt Preferred stock Common stock equity Total Weight 45% 10 45 100% Print Done Enter your answer in the answer box and then click Check Answer. Clear All Check Answer 6 remaining 1 o sebe here to search Type here to search o 7:52 AM o e Bi e a E - _ 9 ^ . 1 ENG 1/30/2020 3