GMC wants to raise an additional of debt as part of the capital that would be needed to expand their project operations.

1. They were informed by their investment banking consultant that they would have to pay a commission of 2% of the selling price on new issues. Their CFO is in the process of estimating the corporations cost of debt for inclusion into the WACC equation. The company currently has an 9%, AA-rated, non-callable bond issue outstanding, which pays interest semi-annually, will mature in 20 years, has a $1000 face value, and is currently trading at $1,058.

Calculate the appropriate cost of new debt for the firm.

2. GMC common stock is trading at $55.8 and its dividends are expected to grow at a constant rate of 6%. The company paid a dividend last year of $2.2. If the company issues stock they will have to pay a flotation cost per share equal to 5.5% of selling price. Calculate EMC's cost of equity with flotation costs.
3. GMC will also be issuing new preferred stock. They will pay a dividend of $4 per share which has a market price of $48. The flotation cost on preferred will amount to $2 per share. What is their cost of preferred stock?
4. The Market wight of equity is 50%, debt is 35% and preferred stock is 15% whereas the tax rate is 25% please calculate adjusted WACC for GMC.