S3. Q1.

Whats the rate of return expected by the preferred shareholders r_ps?

S3. Q2.

According to the Constant Dividend Growth Model, whats the rate of return required by the common stock shareholder? Denote this number by r_cs,0

S3. Q3

Whats the companys WACC in period 0?

S3. Q4

In period 1, shortly after dividends are paid to the preferred stockholders, the company borrows a 10-year term amortized bank loan at APR of 5% and uses the proceeds of which to buy back (retire) outstanding preferred stocks at a price of P_ps,1 = 5.25 dollars per share. Following this news, the price of common stocks drops to P_cs,1 = 9.5 dollars per share in period 1.

Based on the information here, answer questions Q4(a), Q4(b), and Q4(c).