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Show work please without excel. Plug N Play Inc. is considering financing a project. The company uses all the three components of capital for raising
Show work please without excel.
Plug N Play Inc. is considering financing a project. The company uses all the three components of capital for raising its fund; debt, preferred and common equity maintaining a target capital structure of 30%, 30%. and 40%. The company's corporate tax is 35%. Based on the above information, answer the following questions: a. If the company would be able to issue new 20-year debt with a cost of 10%, what is the after-tax component cost of the new debt? b. It can issue perpetual preferred stock at a price of $50 a share. The issue is expected to pay a constant annual dividend of $6.50 a share. The floatation cost on the issue is estimated to be 5% dollar per share. What is the component cost of the new preferred stock? c. The earnings, dividends, and stock price of Plug N Play Inc. are expected to grow at a constant rate of 6 percent per year in the future. Its common stock sells for $25 per share, its last dividend was $3.00. Using the DCF approach, what is the cost of common equity? d. Plug N Play's beta is 3, the yield on T-bond is 8 percent, and the expected return on the market is 14 percent. Using the CAPM approach, what is the cost of common equity? e. If the firm uses a 7-percentage point risk premium, using the bond-yield-plus risk premium approach, what is the cost of common equity? f. The financial analyst of the firm suggests that the company's cost of equity should be taken from the average of all possible approaches. On the basis of the results of parts c to c. what would you estimate Plug N' Play's cost of equity be? g. What is Plug N Play's WACCStep by Step Solution
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