QUESTION 8

You were hired as a consultant to Giambono Company, whose target capital structure is 30% debt, 10% preferred, and 60% common equity. The after-tax cost of debt is 5.75%, the cost of preferred is 8.50%, and the cost of retained earnings is 13.00%. The firm will not be issuing any new stock. What is its WACC?

QUESTION 7

Eakins Inc.s common stock currently sells for $53.00 per share, the company expects to earn $3.80 per share next year, its expected payout ratio is 70%, and its expected constant growth rate is 7.00%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations.

Please show work and do both problems , write answer direclty on chegg