PLEASE DISPLAY EXCEL FORMULAS

D27 variaNes to curvlete the Cost of ital (WACC) at &fferent bre*points_ use tt-w WACCtutyoJ c*LAatedmthis for We is is (so WACC facts: Barki Given: a. Co D BO Co Cost of O imal ital ital Structure: Net income for the comin year: Limits and Interst Rates: 5% $6,000,000 28% Debt Preferred Equ Comrmn Equity use Earnings for common equity until cornplete exhausted for that year (don't spend previous year's RE)_ Dividends policy is to distribute 50% Of annual NI as dividends. Current RE are O. Tax rate $8 Amount 30 r rowed o to Saoonoo over $400,000 Preferred Stock rice: Do: Int&est Rate 13% $45 for the coming year 2S 41 nent costs of Common Stock rice ital: Break point = for the coming After-tax cost Of debt, ATkd (I ) Aft&-tax cost Of debt, ATkd (2) Cost of Prefred Stock, Cost of existing (RE), Cost Of equity, rx AT rd z AT kd(I-TR) up to $400,000 borrowxd AT rd 8T kd(I-TR) if over $400,000 the dividend growth model the dividend growth model and CAPM the dividend growth model and CAPM b. MCC break ints: break int: Net Income Dividends RE available based on 70% common equ- financi c. MCC res, usin r r*es for e u and debt when t break point: WACC up to 1st bre* point: Marginal CC bRween 1st & 2nd break points; M inal CC after 2nd bre* oint: use the lowest cost of each source of financi Uses high& costs Of debt Uses h costs of capital