Urgent Please solve it like this, this is an example

They are the questions

Sample Question A company is expected to pay a $3.50 dividend at year-end, the dividends are expected to grow at a constant rate of 6.50% a year, and the common stock currently sells for 562.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 40% debt and 60% common cquity. What is the company's WACC if all equity is from retained carnings Solution (i) The problem assumes the stock will have a constant growth of 6.5% forever. The constant growth model is appropriate to use for this problem. The accuracy of the solution depends on the correctness of the constant growth assumption The cost of equity assumes there will not be any new stock issuance. Therefore, the cost of equity is the cost of retained camings for the existing shareholders The cost of debt should be on after-tax basis due to the tax shield provided by the interest expense (ii) . The cost of equity is based on the following: K. - (D/P) + Po is the current price to be calculated, D is the next period's dividend, R is the required return on this stock g is the constant growth The cost of debt is based on kuruc.) of 73"F pense. (ii) The cost of equity is based on the following: K. (D/P.) +8 Po is the current price to be calculated, Di is the next period's dividend, Ris the required return on this stock g is the constant growth The cost of debt is based on karakt-T) rd is the before-tax cost of debt Tis the tax rate The WACC is based on: WACC = wake+w.ckr (iii) Cost of retained earnings = (3.5/62.5)+ 0.065 0.121 or 12.1% Cost of debt-7.5 x (1-0.4) = 4.5% WACC = (0.4x4.5) + (0.6x12.1) = 9.06% The average cost of capital for this company based on their existing debt and equity is 9.06% 6. Monted Inc. $1,000 par value corporate bonds mature in 19 years and sell in the market for $1.180. The bonds offer a coupon rate of 6%, paid semiannually. Flotation costs on newly issued bonds are $50 per bond. The corporation is in the 35% tax bracket. What is the company's pre-tax cost of debt on the newly issued bonds? preferred stock? 6. Monted Inc. $1,000 par value corporate bonds mature in 19 years and sell in the market for $1,180. The bonds offer a coupon rate of 6%, paid semiannually. Flotation costs on newly issued bonds are $50 per bond. The corporation is in the 35% tax bracket. What is the company's pre-tax cost of debt on the newly issued bonds