Growth Company's current share price is $20.00 and it is expected to pay a $1.00 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4.4% per year.

a. What is an estimate of Growth Company's cost of equity?

b. Growth Company also has preferred stock outstanding that pays a

$2.00

per share fixed dividend. If this stock is currently priced at

$28.30,

what is Growth Company's cost of preferred stock?

c. Growth Company has existing debt issued three years ago with a coupon rate of

6.4%.

The firm just issued new debt at par with a coupon rate of

6.2%.

What is Growth Company's pretax cost of debt?

d. Growth Company has

5.4

million common shares outstanding and

1.1

million preferred shares outstanding, and its equity has a total book value of

$50.2

million. Its liabilities have a market value of

$19.8

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?

e. Growth Company faces a

21%

tax rate. Given the information in parts

(a)

through

(d),

and your answers to those problems, what is Growth Company's WACC?

Note: Assume that the firm will always be able to utilize its full interest tax shield.