ebook: Basic Definitions WACC Olsen Outfitters Inc, believes that its optimal capital structure consists of 55% common equity and 45% debt, and its tax rate is 40%. Oisen must raise additional capital to fund its upcoming expansion. The firm will have 54 million of retained earnings with a cost of rs -15%. New common stock in an amount up to $7 million would have a cost of re 17%. Furthermore, Olsen can raise up to 34 million of debt at an interest rate of rd9% and an additional $4 million of debt atto 10%. The CFO estimates that a proposed expansion would require an investment of $8.0 million. What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places % Cost of Retained Earnings, CALCULATION OF 9 AND EPS Sidman Products's common stock currently sells for $48 a share. The firm is expected to earn $3.84 per share this year and to pay a year-end dividend of $2.30, and it finances only with common equity a investors require a 8% return, whatis the expected growth rate? Round your answer to two decimal places. Do not round your intermediate calculatio % b. If Sidman reinvests retained earnings in projects whose average return is equal to the stock's expected rate of return, what will be next year's EPS? (Hinta = (1 - Payout ratio) ROE). Round your answer to the nearest cent. Do not round your intermediate calculations. $ per share Click here to read the eBook: The Cost of Retained Earnings, is COST OF COMMON EQUITY Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 11%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 13.40%. What is Pearson's cost of common equity? Do not round Intermediate calculations. Round your answer to two decimal places %