The following is taken from Sampson Athletic Wear Ltd's most recent balance sheet: $ 46,000,000 38,000,000 Long term bonds (par value) Preferred stock (par value) Common equity Common stock Retained earnings $20,000,000 50,000,000 70,000,000 $154,000,000 The company's bonds trade and their yield-to-maturity is 7.5%. They have a coupon rate of 8% and mature in 15 years. Interest is paid semi-annually. New bonds would be issued at par. The preferred stock has a fixed divided rate of 7.8% and a par value of $25 per share. Their current market value is $22 per share. New preferred stock would be issued at their par value and would net the firm $24.25 after flotation costs. The company has 8.4 million common shares outstanding with a market value of $13 per share. They expect to pay a dividend of $0.80 at year end and the dividend growth rate is expected to be 6%. The firm has a beta of 1.4. The current yield on government T-bills is 3.5% and the yield on long- term government bonds is 5%. The return on the market portfolio is expected to be 11%. Sampson uses an average of three methods to estimate its cost of equity. Assume the company's common equity is from infernal sources. Sampson Athletic Wear's corporate tax rate is 30%. Required: a. Compute Sampson Athletic Wear's cost of equity, cost of preferred and cost of debt. Show all calculations. (8 marks) b. Compute Sampson Athletic Wear's weighting of equity, preferred and debt for the purposes of calculating its WACC. Show all calculations. (3 marks) c. Compute Sampson Athletic Wear's weighted average cost of capital. Show all calculations. (1 mark) The following is taken from Sampson Athletic Wear Ltd's most recent balance sheet: $ 46,000,000 38,000,000 Long term bonds (par value) Preferred stock (par value) Common equity Common stock Retained earnings $20,000,000 50,000,000 70,000,000 $154,000,000 The company's bonds trade and their yield-to-maturity is 7.5%. They have a coupon rate of 8% and mature in 15 years. Interest is paid semi-annually. New bonds would be issued at par. The preferred stock has a fixed divided rate of 7.8% and a par value of $25 per share. Their current market value is $22 per share. New preferred stock would be issued at their par value and would net the firm $24.25 after flotation costs. The company has 8.4 million common shares outstanding with a market value of $13 per share. They expect to pay a dividend of $0.80 at year end and the dividend growth rate is expected to be 6%. The firm has a beta of 1.4. The current yield on government T-bills is 3.5% and the yield on long- term government bonds is 5%. The return on the market portfolio is expected to be 11%. Sampson uses an average of three methods to estimate its cost of equity. Assume the company's common equity is from infernal sources. Sampson Athletic Wear's corporate tax rate is 30%. Required: a. Compute Sampson Athletic Wear's cost of equity, cost of preferred and cost of debt. Show all calculations. (8 marks) b. Compute Sampson Athletic Wear's weighting of equity, preferred and debt for the purposes of calculating its WACC. Show all calculations. (3 marks) c. Compute Sampson Athletic Wear's weighted average cost of capital. Show all calculations. (1 mark)