The research and innovation group RIG is the development side of the company D are considering a new contract that will strain resources for note only RIG but the entire company With an up front cost of $6.0 million managers Understand that the cost of capital will be a key part of maintaining and improving clear view competitive edge you have been asked to calculate the company's weighted average cost of capital Based on the following information

Over the last 5 years the annual dividend on the firm's common stock have grown at 4% per Year and this growth is expected to continue indefinitely. A common share dividend of 2.170 per share was recently paid.Common shares trade at $67.00 per share . The company has authorized 353,000 Common shares , with 328,000 common shares issued and outstanding .

The company has issued 122,000 of the 155,000 peferred shares authorized. The annual preferred share dividend is $1.860 per share. The latest preferred share price is $58.700 per share.

CVL has an outstanding bond issue, Payable semi-annually , That originally had a 25 year maturity. The initial bond offering was sold 9 years ago, at par and raised $12.60 million dollars. (To be specific 12,600 bonds were sold at $1000 each , the yield to maturity when they were issued was 5.40 percent. Currently , the nominal yield to maturity on bonds with similar risk is at 5.47 percent

The company will use its current capital structure to set target weights for debt , peferred shares . Flotation are 4.00 percent for peferred shares , 4 percent for common shares and 4 percent for debt. The company's tax rate is 35 percent After tax earnings for the year will be $2 million and the company has a payout ratio of 30 percent.

Question: calculate the following

Bonds	preferred share	common share
Y%	Dp$	D1
TC%	Pp $	P0
F%	F %	G & F

1. Find Market Value of Out Standing Bonds, Preferred Shares & Common Share

A) What is the value of each Bond ?

B) What is the total Market value of bond at Dec 31 2020 ?

c) what is the total market value of preferred shares on Dec 31 2020 ?

D) What is the total market value of common shares at Dec 31 2020?

2) What weights are assigned to Debt, preferred Share & common equity on Dec 31 2020?(Round of answer to two decimal value)

	Percentage
Debt
Preferred
Common

3) Calculate the after tax cost of the various Components of WACC

a) what is the Nominal yield to Maturity Percent ?

b) what is the effective yield to maturity Percent ?

c) calculate the after tax cost of new debt Percent ?

d) Preferred share Percent?

e) common equity in the form of retained earnings ?

f) common equity in the form of new shares Percent?

4) What is the weighted average cost of Capital

a) The company uses new debt , new preferred share& just retained earnings

		After Tax
	Weights	cost	%
debt
preferred
common
		WACC %

B) The company Uses Debt , New Preferred share and New Common Shares?

		After Tax
	Weights	cost	%
debt
preferred
common
		WACC %

5) How Much of the new capital project can be funded without using new share holders?