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please help The following table gives Foust Company's earnings per share for the last 10 years. The common stock, 8.5 million shares outstanding, is now
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The following table gives Foust Company's earnings per share for the last 10 years. The common stock, 8.5 million shares outstanding, is now (1/1/22) selling for $62.00 per share. The expected dividend at the end of the current year (12/31/22) is 55% of the 2021 EPS. Because investors expect past trends to continue, g may be based on the historical earnings growth rate. (Note that 9 years of growth are reflected in the 10 years of data.) Year EPS Year EPS 2012 $3.90 2017 $5.73 2013 4.21 2018 6.19 2014 4.55 2019 6.68 2015 4.91 2020 7.22 2016 5.31 2021 7.80 The current interest rate on new debt is 10%; Foust's marginal tax rate is 25%; and its target capital structure is 50% debt and 50% equity. a. Calculate Foust's after-tax cost of debt. Round your answer to two decimal places. % Calculate Foust's cost of common equity. Calculate the cost of equity as rs D1/Po+g. Do not round intermediate calculations. Round your answer to two decimal places. = % b. Find Foust's WACC. Do not round intermediate calculations. Round your answer to two decimal places. % Step by Step Solution
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