WACC

The following table gives Foust Company's earnings per share for the last $10$ years. The common stock, $7\mathrm{.}7$ million shares outstanding, is now $(1/1/17)$ selling for $$76$ per share. The

expected dividend at the end of the current year $(12/31/17)$ is $65\%$ of the $2016$ EPS. Because investors expect past trends to continue, $g$ may be based on the historical earnings

growth rate. $($Note that $9$ years of growth are reflected in the $10$ years of data.$)$

The current interest rate on new debt is $8\%$; Foust's marginal tax rate is $40\%$; and its target capital structure is $35\%$ debt and $65\%$ equity.

a$.$ Calculate Foust's after$-$tax cost of debt. Round your answer to two decimal places.

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Calculate Foust's cost of common equity. Calculate the cost of equity as $r_s=\frac{D_1}{P_0}+g.$ Round your answer to two decimal places. Do not round your intermediate calculations.

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b$.$ Find Foust's WACC. Round your answer to two decimal places. Do not round your intermediate calculations.