These are the questions and answers provided. How did they get 0.6 in answer E for the Growth Company's WACC? Please provide step-by-step calculations on how they got 0.6 in the last question E equation.

QUESTION Growth Company's current share price is $20.30 and it is expected to pay a $0.85 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 3.7% per year. a. What is an estimate of Growth Company's cost of equity? b. Growth Company also has preferred stock outstanding that pays a \$2.05 per share fixed dividend. If this stock is currently priced at $28.00, what is Growth Company's cost of preferred stock? c. Growth Company has existing debt issued three years ago with a coupon rate of 5.9%. The firm just issued new debt at par with a coupon rate of 6.8%. What is Growth Company's cost of debt? d. Growth Company has 5.1 million common shares outstanding and 1.3 million preferred shares outstanding, and its equity has a total book value of $49.9 million. Its liabilities have a market value of $19.9 million. If Growth Company's common and preferred shares are priced as in parts (a) and (b), what is the market value of Growth Company's assets? e. Growth Company faces a 40% tax rate. Given the information in parts (a) through (d), and your answers to those problems, what is Growth Company's WACC? ANSWER A: Cost of Equity =0.85/20.30+0.037=0.0789=7.89% B: Cost Preferred Stock =2.05/28=0.0732=7.32% C: When issue price is same as face value, return is same as coupon rate. Cost of debt =6.8% D: Common shares outstanding =5.1 million, and its value =5.120.3=$103.53 Preferred shares outstanding =1.3 million, and its value =1.328=$36.40 million Total debt value =$19.90 million Value of firm =103.53+36.4019.90=$159.82 million E:WACC=6.80.6(19.90/159.82)+7.32(36.40/159.82)+7.89(103.53/159.82)=7.286%