please help and write out formulas

2 Student instructions. Use the forecasting variables below to complete tho Woighted Average Cost of Capital (WACC) at different break points. Use the same WACC that you calculated on this sheet for all yours and we are using the highest this time. Preferred stock is issued, but some is not yet outstanding (sono fontation og preferred 4 WACC facts 5 Given: 2 Barking Dog Corp Cost of Capital Optimal Capital Structure: 25% Debt 10% Preferred Equity 65% Common Equity Net income for the coming year: $4,000,000 Use Retained Earnings for common equity until completely exhausted for that year (don't spend previous year's RE). Dividends policy is to distribute 60% of annual Nl as dividends Current RE are o 30% Tax rate 1 10 13 14 15 10 Borrowing Limits and Interest Rates Amount Borrowed 0 to $400,000 over $400,000 Interest Rate BX 12% 17 TE 10 536 Common Stock price: DO: $60 Preferred Stock price: S5 for the coming year DO 7 $4 for the coming year Common Stock price: DO; $60 Preferred Stock price: $5 for the coming year DO: 7% 8% $36 $4 for the coming year B Float: a. Component costs of capital: After-tax cost of debt, ATkd (1) After-tax cost of debt, ATkd (2) Cost of Preferred Stock, P Cost of existing equity (RE), TRE Cost of new equity, IN per AT rd - BT kd(1-TR) up to $400,000 borrowed per AT rd-BT kd(1-TR) If over $400,000 borrowed per the dividend growth model per the dividend growth model and CAPM per the dividend growth model and CAPM b. MCC break points: Debt break point: based on 25% debt financing Equity break point: Net Income Dividends RE available G H Debt break point: based on 25% debt financing Equity break point: Net Income Dividends RE available Break point = based on 65% common equity financing MCC figures, using higher rates for equity and debt when past break point: WACC up to 1st break point: Marginal CC between 1st & 2nd break points: Marginal CC after 2nd break point: Uses higher costs of debt Uses higher costs of capital 2 Student instructions. Use the forecasting variables below to complete tho Woighted Average Cost of Capital (WACC) at different break points. Use the same WACC that you calculated on this sheet for all yours and we are using the highest this time. Preferred stock is issued, but some is not yet outstanding (sono fontation og preferred 4 WACC facts 5 Given: 2 Barking Dog Corp Cost of Capital Optimal Capital Structure: 25% Debt 10% Preferred Equity 65% Common Equity Net income for the coming year: $4,000,000 Use Retained Earnings for common equity until completely exhausted for that year (don't spend previous year's RE). Dividends policy is to distribute 60% of annual Nl as dividends Current RE are o 30% Tax rate 1 10 13 14 15 10 Borrowing Limits and Interest Rates Amount Borrowed 0 to $400,000 over $400,000 Interest Rate BX 12% 17 TE 10 536 Common Stock price: DO: $60 Preferred Stock price: S5 for the coming year DO 7 $4 for the coming year Common Stock price: DO; $60 Preferred Stock price: $5 for the coming year DO: 7% 8% $36 $4 for the coming year B Float: a. Component costs of capital: After-tax cost of debt, ATkd (1) After-tax cost of debt, ATkd (2) Cost of Preferred Stock, P Cost of existing equity (RE), TRE Cost of new equity, IN per AT rd - BT kd(1-TR) up to $400,000 borrowed per AT rd-BT kd(1-TR) If over $400,000 borrowed per the dividend growth model per the dividend growth model and CAPM per the dividend growth model and CAPM b. MCC break points: Debt break point: based on 25% debt financing Equity break point: Net Income Dividends RE available G H Debt break point: based on 25% debt financing Equity break point: Net Income Dividends RE available Break point = based on 65% common equity financing MCC figures, using higher rates for equity and debt when past break point: WACC up to 1st break point: Marginal CC between 1st & 2nd break points: Marginal CC after 2nd break point: Uses higher costs of debt Uses higher costs of capital