J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. The firm's current after-tax cost of debt is 8 percent, and it can sell as much debt as it wishes at this rate. The firm's preferred stock currently sells for $95 a share and pays a dividend of $11 per share; however, the firm will net only $85 per share from the sale of new preferred stock. Ross expects to retain $20,000 in earnings over the next year. Ross' common stock currently sells for $50 per share, but the firm will net only $42 per share from the sale of new common stock. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. 1. What is the firm's cost of retained earnings? [ Select ] 2. What is the firm's cost of newly issued common stock? [ Select ] 3. What is the firm's cost of newly issued preferred stock? [ Select] 4. Where will a break in the WACC curve occur? [ Select ] 5. What will be the WACC above this break point? [ Select] J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. The firm's current after-tax cost of debt is 8 percent, and it can sell as much debt as it wishes at this rate. The firm's preferred stock currently sells for $95 a share and pays a dividend of $11 per share; however, the firm will net only $85 per share from the sale of new preferred stock. Ross expects to retain $20,000 in earnings over the next year. Ross' common stock currently sells for $50 per share, but the firm will net only $42 per share from the sale of new common stock. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. 1. What is the firm's cost of retained earnings? [ Select ] 2. What is the firm's cost of newly issued common stock? [ Select ] 3. What is the firm's cost of newly issued preferred stock? [ Select] 4. Where will a break in the WACC curve occur? [ Select ] 5. What will be the WACC above this break point? [ Select]