Cost of capital GB Timbers GmbH, based in Germany, supplies timber products to construction and manufacturing industries. The company reported after-tax earnings available to common stock of 3,200,000. From these earnings, the management decided to pay a dividend of 0.80 on each of its 4,000,000 common shares out- standing. The capital structure of the company includes 30% debt, 40% common stock, and 30% preferred stock. The tax rate applicable to GB Timbers is 30%. a. If the market price of the common stock is 3.60 and dividends are expected to grow at a rate of 8% per year for the foreseeable future, what is the required return on the company's common stock? b. If underpricing and flotation costs on new shares of common stock amount to 0.40 per share, what is the company's cost of new common stock financing? c. The company can issue a 1.00 dividend preferred stock for a market price of 10.00 per share. Flotation costs would amount to 0.60 per share. What is the cost of preferred stock financing? d. In addition, the company can issue 100-par-value, 8% coupon, 10-year bonds that can be sold for 110 each. Flotation costs would amount to 2 per bond. Use the estimation formula to figure the approximate cost of debt financing. e. What is the WACC