Cost of capital Edna Recording Studios, Inc., reported earnings available to common stock of $4,200,000 last year. From those earnings, the company paid a dividend of $1.21 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 40% debt, 20% preferred stock, and 40% common stock. It is taxed at a rate of 21% a. If the market price of the common stock is $44 and dividends are expected to grow at a rate of 7% per year for the foreseeable future, what is the company's cost of retained earnings financing? b. If underpricing and flotation costs on new shares of common stock amount to $8 per share, what is the company's cost of new common stock financing? c. The company can issue $1.95 dividend preferred stock for a market price of $32 per share. Flotation costs would amount to $6 per share. What is the cost of preferred stock financing? d. The company can issue $1,000-par-value, 12% annual coupon, 8-year bonds that can be sold for $1,110 each. Flotation costs would amount to $40 per bond. What is the after-tax cost of debt financing? e. What is the WACC? a. If the market price of the common stock is $44 and dividends are expected to grow at a rate of 7% per year for the foreseeable future, the company's cost of retained earnings financing is 9.93%. (Round to two decimal places.) b. If underpricing and flotation costs on new shares of common stock amount to $8 per share, the company's cost of new common stock financing is 5.52 %. (Round to two decimal places.)