Edna Recording Studios, Inc., reported earnings available to common stock of $4,000,000 last year. From those earnings, the company paid a dividend of $1.17

on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 35% debt, 25% preferred stock, and 40% common stock. It is taxed at a rate of

21%.

a.If the market price of the common stock is $39 and dividends are expected to grow at a rate of 6% 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 $9 per share, what is the company's cost of new common stock financing?

c.The company can issue $2.12 dividend preferred stock for a market price of $35 per share. Flotation costs would amount to $5 per share. What is the cost of preferred stock financing?

d.The company can issue $1,000-par-value, 8% annual coupon, 12-year bonds that can be sold for $1,170 each. Flotation costs would amount to $20 per bond. What is the after-tax cost of debt financing?

e.What is the WACC?