Reference no: EM132485017

Edna Recording? Studios, Inc., reported earnings available to common stock of ?$4,000,000 last year. From those? earnings, the company paid a dividend of ?$1.21 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 25?% ?debt, 10% preferred? stock, and 65?% common stock. It is taxed at a rate of 23?%.

a. If the market price of the common stock is ?$49 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 ?$2.02 dividend preferred stock for a market price of ?$32per share. Flotation costs would amount to ?$2 per share. What is the cost of preferred stock financing??

d. The company can issue ?$1,000?-par-value, 11?% ?coupon, 13?-year bonds that can be sold for ?$1,200 each. Flotation costs would amount to ?$30 per bond. Use the estimation formula to figure the approximate? after-tax cost of debt? financing?

e. What is the WACC??