Card 18 1. The BMW Company want to raise its capital that is why currently this company has decide to take a credit from the bank as a loan within 4 years and the company total debt is 5 million dollar. That loan interest rate is 10% per year and company marginal tax rate is 10%. Besides this, the company will also issue preferred stock. Per share will be paid a dividend $4 by the company and per share market price is at $40. The flotation cost on preferred will amount to $4 per share. Apart from, the company's common stock is trading price at $44 and its dividends are expected to grow at a constant rate of 3%. The company paid a dividend previous year of $4. The company decide to issue common stock but the company will have to pay a flotation cost per share equal to 2% of selling price. Addition to this, the company decided to use all of their expected retained earnings in the coming year. Therefore, the company's beta is estimated 0.85 by the SML and market risk premium is 5%. US treasury yield 1.88%, Greece treasury yield 8.32 %, Italy treasury yield 7.88%, and Germany treasury yield 2%. DAX index monthly date. January 15872,46 point, February 15842,13 point, March 16152,86 point, April 16223,99 point, May 16275,38 point, June 16163,36 point, July 15951,3 point, August 15897,93 point, September 15917,24 point, October 15913,82 point, November 15834,91 point, December 15896,23 point. FTSE index monthly date. January 28649,65 point, February 28593,98 point, March 29286,29 point, April 29434,75 point, May 29664,81 point, June 29664,81 point, July 29335,71point, August 29383,16 point, September 29482,74 point, October 29233,1 point, November 29391,97point, December 29482,74 point. The company tax shield rate 8%. The company has an additional information below. Component Debt Balance Sheet Value Number outstanding Current Market Price $ 150,000,000 Preferred Stock $ 45,000,000 Common Stock $ 180,000,000 150,000 1,500,000 4,500,000 $1,095 $46 $45 Calculate the cost of new debt, cost of equity, cost of preferred stock, the Dividend Growth Model and WACC for the firm