Hey, I asked this question twice, but none of them provide correct answer with solution. I'm almost give up with chegg.

Again, all other questions are solved,but only question D asking for WACC1 and WACC2.. (Below is the question and one wrong solution from previous asks)

Here's one of the wrong solution somebody gave to me. (the answer is not 7.55 & 7.75%)

Here's the excel that I was working on,

Plz give me reasonable solutions. Thanks.

Here is the condensed 2021 balance sheet for Skye Computer Company (in thousands of dollars): Skye's earnings per share last year were $3.40. The common stock sells for $55.00, last year's dividend (D0) was $2.30, and a flotation cost of 10% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of 8%. Skye's preferred stock pays a dividend of $3.50 per share, and its preferred stock sells for $35.00 per share. The firm's before-tax cost of debt is 9%, and its marginal tax rate is 25%. The firm's currently outstanding 9% annual coupon rate, longterm debt sells at par value. The market risk premium is 6\%, the risk-free rate is 7\%, and Skye's beta is 1.624 . The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1.775 million. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Round your answers to two decimal places. a. Calculate the cost of each capital component, that is, the after-tax cost of debt, the cost of preferred stock, the cost of equity from retained earnings, and the cost of newly issued common stock. Use the DCF method to find the cost of common equity. After-tax cost of debt: % Cost of preferred stock: % Cost of retained earnings: % Cost of new common stock: % b. Now calculate the cost of common equity from retained earnings, using the CAPM method. % c. What is the cost of new common stock based on the CAPM? (Hint: Find the difference between re and rs as determined by the DCF method, and add that differential to the CAPM value for rs ) % d. If Skye continues to use the same market-value capital structure, what is the firm's WACC assuming that (1) it uses only retained earnings for equity and (2) if it expands so rapidly that it must issue new common stock? (Hint: Use the market value capital structure excluding current liabilities to determine the weights. Also, use the simple average of the required values obtained under the two methods in calculating WACC.) WACC 1 : % WACC 2 : % Step 1: Cost of Equity (Ke) Ke=( Dividend / Stock Price )+ Dividend Growth Rate Values given in the question: Dividend (D0)=$2.30 Stock Price =$55.00 Dividend Growth Rate (g)=8% So, after substituting the values in the formula we get: Ke=($2.30/$55.00)+0.08=0.0418+0.08 Therefore, Ke=0.1218 or 12.18% Step 2: Cost of Debt (Kd) Kd= Before-tax cost of debt (1 - Tax rate) Values given in the question: Before-tax cost of debt =9% Marginal tax rate =25% Total debt =$1,775,000 So, after substituting the values in the formula we get: Kd=0.09(10.25)=0.090.75 Therefore, Kd=0.0675 or 6.75% Step 3: Weights of each component in the capital structure Total market value of the firm's securities (V) is already given as $5,000,000 Market value of equity (E)= Total common equity =$2,050,000 Market value of debt (D)= Total debt =$1,775,000 Market value of preferred stock (P)= Number of preferred shares * Preferred stock price P=15,000$35.00=$525,000 Explanation: Summary of the values evaluated above: Ke=0.1218or12.18%Kd=0.0675or6.75%V=$5,000,000E=$2,050,000D=$1,775,000P=$525,000 Firstly, we have to calculate the Cost of Preferred Stock (Kp) in order to calculate WACC: To calculate the cost of preferred stock (Kp), we can use the formula: Kp= Preferred Dividend / Preferred Stock Price Values given in the question: Preferred dividend =$3.50 per share Preferred stock price =$35.00 per share Therefore, Kp=$3.50/$35.00=0.10 or 10% Now, Let's begin with the Calculation of Weighted Average Cost of Capital (WACC) WACC 1 : Assuming only retained earnings for equity. WWACC1=(KeE/V)+(KdD/V)+(KpP/V)WPCC1=(0.1218$2,050,000/$5,000,000)+(0.0675$1,775,000/$5,000,000)+(0.10$525,000/$5,000,000)WACC1=0.049996+0.015041+0.0105 Therefore, WACC 1=0.075537 or 7.55% WACC 2: Assuming the company must issue new common stock To calculate the cost of new common stock, we need to use the following formula: Cost of new common stock (Kn)= (Dividend / Net proceeds per share) + Dividend Growth Rate Values given in the question: - Dividend (D0)=$2.30 - Stock Price =$55.00 - Flotation cost per share =10% of the stock price =10%$55.00=$5.50 - Net proceeds per share = Stock Price - Flotation cost per share =$55.00$5.50=$49.50 - Dividend Growth Rate (g)=8% So, after substituting the values in the formula we get: Kn=($2.30/$49.50)+0.08=0.0465+0.08 Therefore, Kn=0.1265 or 12.65% Now, we can calculate the WACC using the new cost of equity: WWACC2=(KnE/V)+(KdD/V)+(KpP/V)WACC2=(0.1265$2,050,000/$5,000,000)+(0.0675$1,775,000/$5,000,000)+(0.10$525,000/$5,000,000)WACC2=0.0520325+0.015041+0.0105 Explanation: Therefore, WACC1=0.075537or7.55%WACC2=0.0775735or7.75% d