Growth Company's current share price is $20 and it is expected to pay a $1 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4% per year.

1. What is an estimate of Growth Company's cost of equity?
2. Growth Company also has preferred stock outstanding that pays a $2 per share fixed dividend. If this stock is currently priced at $28, what is Growth Company's cost of preferred stock?
3. GrowthCompanyhasexistingdebtissuedthreeyearsagowithacouponrateof6%. The firm just issued new debt at par with a coupon rate of 6.5%. What is Growth Company's pretax cost of debt?
4. Growth Company has 5 million common shares outstanding and 1 million pre- ferred shares outstanding, and its equity has a total book value of $50 million. Its liabilities have a market value of $20 million. If Growth Company's common and preferred shares are priced as in parts (a) and (b), what is the market value of Growth Company's assets?
5. GrowthCompanyfacesa35%taxrate.Giventheinformationinparts(a)through(d), and your answers to those problems, what is Growth Company's WACC?