Question 3 Buildwell Conservation & Construction Inc. (BCCI) reported net income for the last audited financial statement is $5,000,000 available to common shareholders after paying their preferred shareholders. The company has recently paid dividend $0.75 per share with the 1,000,000 common shares currently trading in the market. The company's capital structure is included of 40 percent debt, 10 percent preferred shares and 50 percent common shares. The company were taxed at 40 percent. (a) If the common shares are currently trading at $45 per share and the dividend is expected to grow at 4 percent per year for the foreseeable futures, determine the company's cost of retained earnings. (2 marks) (b) If underpricing and flotation costs on new common share amount to $10.00 per share, compute the company's cost of new common share financing. (3 marks) (c) The company can issue $1.75 dividend preferred shares for a market price of $20.00 per share. Flotation costs would amount to $2.50 per share. Calculate the cost of new preferred stock financing. (2 marks (d) The company is considering to issue new bond with a par value of $1,000, 10 percent coupon rate with 8 years maturity. The company's old bond currently trading at $1,200 per bond. Flotation cost would amount to $15 per bond. Calculate the new cost of debt financing (4 marks) (e) Determine the BCCI new weighted average cost of capital (WACC) if the company decided to issue new shares. (2 marks) (f) Currently BCCI is in view of accepting a new project offering return of 8 percent. Should the company accept or reject the project. Justify your answer. (2 marks)