Gold Sharks company hired you as a consultant to estimate the companys WACC .

The firms target capital structure is 30.5% Debt, 13% Preferred stock and 56.5% Common Equity.

The Firms noncallable bonds mature in 15years. The bonds have a 9.5% annual coupon rate, a par value of $1,000 and a market price of $1,135. Bonds pay coupon payments semi annually. The firm has 200,000 bonds outstanding.

The firm has 7%, $100 par value preferred stocks. There are 1M shares outstanding. The preferred stock currently sells at $98 per share.

Common Equity investors bond yield risk premium 6.5%.

Risk free rate is 2.25%, market risk premium 10.5% and common stock beta is 1.15. Companys tax rate 30%.

The firm has 20M shares outstanding of common stocks that sell at $22 per share. The firm just paid a dividend of $2

per share and the constant growth rate is expected to be 5.5%

Calculate the cost of Equity using each one of the three methods,

Calculate the cost of debt and the cost of preferred stock and finally

Calculate the WACC using the target capital structure provided and using the lowest of the three methods (Bond yield risk premium, CAPM and DCF) to estimate the cost of equity.

Do not round your intermediate calculations.