Given the following data:

The firms marginal tax rate is 21%.

The current price of the corporations 10% coupon, semiannual payment, noncallable bonds with 15 years remaining to maturity is $1,011.55. The company does not use short-term interest-bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost.

The current price of the firms 10%, $100 par value, quarterly dividend, perpetual preferred stock is $110.12. The company would incur flotation costs of $3 per share on a new issue.

The companys common stock is currently selling at $55 per share. Its last dividend (D0) was $4.99, and dividends are expected to grow at a constant rate of 4.8% in the foreseeable future. The companys beta is 1.1, the yield on Treasury bonds is 4%, and the market risk premium is estimated to be 7%. For the bond-yield-plus-risk-premium approach, the firm uses a four percentage point risk premium.

Up to $300,000 of new common stock can be sold at a flotation cost of 15%. Above $300,000, the flotation cost would rise to 25%.

The companys target capital structure is 30 %long-term debt, 10% preferred stock, and 60% common equity.

The firm is forecasting retained earnings of $300,000 for the coming year.

Answer the following questions

f. What is the bond-yield-plus-risk-premium estimate for the companys cost of retained earnings?

g. What is your final estimate for rs?