Golding Enterprises has 50,000 shares outstanding, of which 20% are preferred shares and 80% are common shares. The preferred shares pay $2.00 per year in dividends and are priced at $40 per share. The last dividend paid to common stockholders was $5 per share and the company expects to grow at 2% forever. The current price of the common stock is $80. The company currently has no long term debt. Make sure that you carry enough decimals when you do your calculation.

What is the WACC of Golding Enterprises? a) 6% b) 3% c) 5% d) 7% e)8%

What is the expected return on the common stock of Golding Enterprises? a) 8.375% b) 10.001% c) 9.256% d) 6.678% e) 7.516%