D H F G K M Yorkville Corp. plans to maintain a capital structure of 40% debt and 60% equity, and pays taxes at 35%. In the coming year, the company plans to pay 25% of its $2,000,000 forecasted earnings as dividends. The company has discovered the following about 1 external financing 2 Bonds: Up to $1 million of new bonds could be sold at a required rate of 12%. If the company needs to raise more than $4 3 million, the required rate would rise to 13%. Flotation costs on new debt would be negligible. 4 Stock: Yorkville's shareholders are anticipating a $2 per-share dividend next year and forecast the dividend will grow at a rate of 6%. It's stock currently sells for $25 per share. Flotation costs on a new stock issue would be 5%. 5 6 7 Required: 8 Calculate Yorkville's costs (there are two here) of debt financing. 9 10 11 12 Calculate the required rate of return of Yorkville's stockholders. 13 14 15 16 17 Calculate Yorkville's cost of retained earnings financing 18 19 20 21 22 Calculate Yorkville's cost of a new equity issue. 23 24 25 26 27 Locate the breaks in the in Yorkville's Marginal Cost of Capital (MCC) Schedule 28 29 30 31 Calculate the weighted average cost of capital (WACC) in wach interval. 32 33