PART B 40 Marks Question No 01 (10 Marks) Book value per share of Facebook corporation is $10. The company plans to pay 13.4% divided next year. Corporate tax rate is 35%. a. If the market price of the common stock is $70 and dividends are expected to increase at a rate of 6% per year for the foreseeable future, what is the company's cost of retained earings financing? b. If underpricing and flotation costs on new shares of common stock amount to $8.00 per share, what is the company's cost of new common stock financing? c. The company can issue $2.00 dividend preferred stock. The market price of the preferred stock is expected to be half of the market price of the common stock. Flotation costs is expected to be 15% of market price of the share. What is the cost of preferred stock financing? d. The company can issue $1,000-par-value, 10% coupon, 5-year bonds, market price of the bond is 20% more than par-value and flotation cost would be 3.5% of par-value. Use the estimation formula to figure the approximate cost of debt financing. e. What is the WACC if the capital structure of Facebook corporation is: a) common stock 40%, and b) remaining portion is equally divided between preferred stock and bond