Cost of Capital. Delta, Inc. has a stock price of $$50.$ In the fiscal year just ended, dividends were $52\mathrm{.}00.$ Eamings per share and dividends are expected to increase at an annual rate of $8$ percent. The risksfiee rate is $4$ percent, the market risk premium is $6\mathrm{.}4$ percent and the beta on Delta's stock is $1\mathrm{.}25.$ Delta's target capital stucture is $40\%$ debt and $60\%$ common equity. Delta's tax rate is $40$ percent.

New common stoek can be sold to net $$40$ per share after flotation costs.

Delta can sell bonds that mature in $25$ years with a par value of $$1,000$ and an $8\%$ coupon rate paid annually for $5960.$

a$.$ Calculate the before$-$tax interest rate on new debt financing. $3$

b$.$ Calculate the aftertax cost of debt financing. $[2]$

C$.$ Calculate the required retum on the firm's stock using CAPM. $[3]$

d$.$ Calculate the required retum on the firm's stock using the discounted cash flow approach. $[3]$

e$.$ Calemlate the cost of finanging from the sale of common stock.

$[8]$

Caleulate the WACC if equity financing is from retained camings and CAPM $3$

g$.$ Calenlate the WACC if equily financing is from the sale of common strock. $[8]$