1. Determine the following :

1. before tax cost of debt;
2. after-tax cost of debt;
3. cost of preferred stock;
4. cost of common equity (using CAPM);
5. cost of common equity (using dividend growth model);
6. cost of new common equity( using dividend growth model);
7. WACC (cost of common equity using CAPM)
8. WACC (cost of new common equity )

Bond maturity (years)		20
Payments per year		2
Annual coupon rate		10%
Par		$1,000.00
Bond price		$1,050.00
Tax rate		25%
Preferred stock price		$65.00
Dividends for preferred stock		$2.50
Flotation cost for preferred		8%
P0 (stock price)		$125.00
D0 (most recent Dividends)		$2.50
growth rate		6%
Flotation cost for common		3.00%
Beta		0.95
Market return, RM		8.00%
Risk free rate, rRF		3.00%
Target capital structure from debt		35%
Target capital structure from preferred stock		20%
Target capital structure from common stock		45%