Module 8 Assignment The Noalon Manufacturing Company, Inc., is in the midnt of negotiation to noguire a plant in Fargo, North Dakota. The company CFO, Jarnes Nealon, is the son of the founder and CEO of the company and the heir apparent to the CEO position, so he is very concerned about making such a large commitment of money to the new plant. The cost of the purchase is $40 milion, which is roughly one-half the site of the company today To begin his analysis, James has launched the fe's very first cost-of-capital antimation. The company's current balance sheet, rostated to reflect market values, has been converted to percentages as follows: Nealon Manufacturing Company Inc., Putere How 15 C The company paid dividends to its common stockholders of $1.75 per share ont year, and the projected rate of annual growth in dividends is 7 percent per year for the indefinite future. Nelon's common stock trades over the counter and has a current market price of $35 per share. In addition, the firm's bonds have an MA rating Moreover, MA bonds are currently yelding 7 percent. The preferred stock han a current market price of $10 per share. a. If the firm is in a 34 percent tax bracket, what is its weighted average cost of capital? b. In the analysis done so far we have not considered the effects of flotation costs. Assume now that Noalon is raining a total of $40 milion using the above financing mo. New debt financing will require that the firm pay 50 basis points one of a percent) in isse costs, the preferred stock issue will require flotation costs of 200 bass points, and the common stock issue will require flotation costs of 500 basis points What are the total flotation costs the firm will incur to raise the needed $40 million? 1. How should the flotation costs be incorporated into the analysis of the $40 million investment the flem plans to make