Homework: Chapter 13 Homework Save Score: 0 of 1 pt 13 (6 complete) HW Score: 44.23%, 5.75 of 13 pts Question Help P 13-17 (similar to) Growth Company's current share price is $20.20 and it is expected to pay a $0.85 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4.3% 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 $2.30 per share fixed dividend. If this stock is currently priced at $28.25, what is Growth Company's cost of preferred stock? c. Growth Company has existing debt issued three years ago with a coupon rate of 5.6%. The firm just issued new debt at par with a coupon rate of 6.7%. What is Growth Company's 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 $50.1 million. Its liabilities have a market value of $19.9 million. If Growth Company's common and preferred shares are priced as in parts (a) and (b), what is the market value of Growth Company's assets? e. Growth Company faces a 38% tax rate. Given the information in parts (a) through (d), and your answers to those problems, what is Growth Company's WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. a. What is an estimate of Growth Company's cost of equity? The required return (cost of capital) of levered equity is %. (Round to two decimal places.) i Data Table 2016 2015 30.1 26.7 Global Corporation Balance Sheet for 2016 and 2015 ($ millions) Assets 2016 2015 Liabilities and Stockholders' Equity Current Assets Current Liabilities Cash 23.8 21.1 Accounts payable Accounts receivable 19.4 12.2 Notes payable/short-term debt Inventories 14.9 Total current liabilities Total current assets 58.3 Long-Term Liabilities Long-Term Assets Long-term debt Net property, plant, and equipment 113.3 80.4 Total long-term liabilities Total long-term assets 113.3 80.4 Total Liabilities 15. 1 5.4 35.5 14 29.6 48.2 78.0 113.5 113.5 149.0 78.0 107.6 7.2 Stockholders' Equity Common stock and paid-in surplus Retained earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 15.4 22.6 171.6 7.2 13.8 21.0 128.6 Total Assets 171.6 128.6 Print Done