The Dempere Imports Company's EPS in 2014 was $1.85 and in 2009 it was $1.12. The company's payout ratio is 40% and the stock is currently valued at $62.35. Flotation costs for new equity will be 12%. Net income in 2015 is expected to be $15 million. The company's investment banker estimates that it could sell 10-year semiannual bonds with a coupon rate of 7%. The face value would be $1,000 and the flotation costs for a bond issue would be 3%. The market value weights of the firm's debt and equity are 30% and 70% respectively. The firm faces a 35% tax rate. A. Based on the five-year track record, what is Dempere's EPS growth rate? What will the dividend be in 2015? B. Calculate the firm's cost of retained earnings and the cost of new common equity. C. Calculate the break-point associated with retained earnings. D. What is the firm's after-tax cost of new debt. E. If Dempere's after-tax cost of debt is 6%, what is the WACC with retained earnings? With new common equity? F. Create a scatter chart that shows the firm's marginal WACC as a step function. The x-axis should go to at least $20 million. Be sure to fully label the chart, including a data label with leader lines that shows the value of the break-point. I believe I have A, B, D and E (file attached), but would appreciate confirmation. I am completely stuck in regards to C and then being able to figure out WACC and thus finish F.

Dempere Imports Dividend Payout Ratio Earnings Per Share Stock Value Flotation Costs Net Income 2015 Weight of Equity Growth Rate of EPS Dividend 2015 Cost of Retained Earnings Proceeds Cost of New Common Equity Retained Earnings Break-point of Retained Earnings 2014 2009 40% $1.85 $62.35 12% $15,000,000 70% 10.56% $1.12 $0.74 11.74% 54.87 11.91% $9,000,000 Additional Bond Data Tax Rate Coupon Rate Face Value Maturity Weight of Debt After-Tax Cost of Debt 35% 7% $1,000 10 30% 10.50% WACC with Retained Earnings WACC with New Common Equity 11.37% 10.13% 6% 10.02%