Growth Company s current share price is 19 95 and it is

Last updated: 8/1/2023

Growth Company s current share price is 19 95 and it is expected to pay a 1 30 dividend per share next year After that the firm s dividends are expected to grow at a rate of 4 3 per year a What is an estimate of Growth Company s cost of equity The required return cost of capital of levered equity is Round to two decimal places b Growth Company also has preferred stock outstanding that pays a 2 30 per share fixed dividend If this stock is currently priced at 28 05 what is Growth Company s cost of preferred stock The cost of capital for preferred stock is Round to two decimal places 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 The pre tax cost of debt is d Growth Company has 5 2 million common shares outstanding and 1 1 million preferred shares outstanding and its equity has a total book value of 50 2 million Its liabilities have a market value of 20 5 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 The market value of assets is million Round to two decimal places e Growth Company faces a 38 tax rate Given the information in parts a through d and your answers to those problems what is Growth Company s WACC The weighted average cost of capital is Round to two decimal places