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need help please . a through e Cost of capital Edna Recording Studios, Inc., reported earnings available to common stock of $4 200,000 last year.
need help please . a through e
Cost of capital Edna Recording Studios, Inc., reported earnings available to common stock of $4 200,000 last year. From those earnings, the company paid a dividend of $123 on each of its 1,000,000 common shares outstanding The capital structure of the company includes 30% debt, 25% preferred stock, and 45% common stock. It is taxed at a rate of 23% a. If the market price of the common stock is $31 and dividends are expected to grow at a rate of 8% per year for the foreseeable future, what is the company's cost of retained earnings financing? b. If underpricing and flotation costs on new shares of common stock amount to 56 per share, what is the company's cost of new common stock financing? c. The company can issue 52 33 dividend preferred stock for a market price of $29 per share. Flotation costs would amount to $3 per share. What is the cost of preferred stock financing? d. The company can issue 51,000-par-value, 8% coupon, 15-year bonds that can be sold for $1.290 each. Flotation costs would amount to $20 per bond. Use the estimation formula to figure the approximate after-tax cost of debt financing? e. What is the WACC? a. If the market price of the common stock is $31 and dividends are expected to grow at a rate of 8% per year for the foreseeable future, the company's cost of retained earnings financing is % (Round to two decimal pla b. I underpricing and Rotation costs on new shares of common stock amount to 56 per share, the company's cost of new common stock financing is % (Round to two decimal places.) c. If the company can issue 52.33 dividend preferred stock for a market price of $29 por share, and flotation costs would amount to $3 per share the cost of preferred stock financing is % (Round to two decimal places) d. If the company can issue $1,000-par-value, 8% coupon, 15-year bonds that can be sold for $1.290 each, and flotation costs would amount to 520 per bond using the estimation formula, the approximate after-tax cost of deb financing (Round to two decimal places) e. Using the cost of retained earnings, the firm's WACC., % (Round to two decimal places) Using the cost of new common stock. the firm's WACC (Round to two decimal places.) Enter your answer in each of the answer boxesStep by Step Solution
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