urgent :) second photo has the question for question e
Cost of capital Edna Recording Studios, Inc., reported earnings available to common stock of $4,800,000 last year. From those earnings, the company paid a dividend of $1.17 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 45% debt, 10% preferred stock, and 45% common stock. It is taxed at a rate of 21%. a. If the market price of the common stock is $50 and dividends are expected to grow at a rate of 5% per year for the foreseeable future, what is the company's cost of retained earnings financing? b. If underpricing and flotation costs on new shares of common stock amount to $6 per share, what is the company's cost of new common stock financing? c. The company can issue $2.05 dividend preferred stock for a market price of $35 per share. Flotation costs would amount to $5 per share. What is the cost of preferred stock financing? d. The company can issue $1,000-par-value, 9% annual coupon, 10 -year bonds that can be sold for $1,200 each. Flotation costs would amount to $20 per bond. What is the after-tax cost of debt financing? e. What is the WACC? a. If the market price of the common stoci is $50 and dividends are expected to grow at a rate of 5% per year for the foreseeable future, the company's cost of retained earnings financing is \%. (Round to two decimal places.) b. If underpricing and flotation costs on new shares of common stock amount to $6 per share, the company's cost of new common stock financing is \%. (Round to two decimal places.) c. If the company can issue $2.05 dividend preferred stock for a market price of $35 per share, and flotation costs would amount to $5 per share, the cost of preferred stock financing is \%. (Round to two decimal places.) d. If the company can issue $1,000-par-value, 9% coupon, 10 -year bonds that can be sold for $1,200 each, and flotation costs would amount to $20 per bond, the after-tax cost of debt financing is decimal places.) \%. (Round to two Cost of capital Edna Recording Studios, Inc., reported earnings available to common stock of $4,800,000 last year. From those eamings, the company paid a dividend of $1.17 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 45% debt, 10% preferred stock, and 45% common stock. It is taxed at a rate of 21%. a. If the market price of the common stock is $50 and dividends are expected to grow at a rate of 5% per year for the foreseeable future, what is the company's cost of retained earnings financing? b. If underpricing and flotation costs on new shares of common stock amount to $6 per share, what is the company's cost of new common stock financing? c. The company can issue $2.05 dividend preferred stock for a market price of $35 per share. Flotation costs would amount to $5 per share. What is the cost of preferred stock financing? d. The company can issue $1,000-par-value, 9% annual coupon, 10 -year bonds that can be sold for $1,200 each. Flotation costs would amount to $20 per bond. What is the after-tax cost of debt financing? e. What is the WACC? b. If underpricing and flotation costs on new shares of cnmon stock amount to $6 per share, the company's cost of new common stock financing is %. (Round to two decimal places.) c. If the company can issue $2.05 dividend preferred stock for a market price of $35 per share, and flotation costs would amount to $5 per share, the cost of preferred stock financing is \%. (Round to two decimal places.) d. If the company can issue $1,000-par-value, 9% coupon, 10 -year bonds that can be soid for $1,200 each, and flotation costs would amount to $20 per bond, the after-tax cost of debt financing is %. (Round to two decimal places.) e. Using the cost of retained earnings, rr, the firm's WACC, ra, is %. (Round to two decimal places.) Using the cost of new common stock, rn, the firm's WACC, ra, is %. (Round to two decimal places.)
