Reference no: EM133017038
Question - Now (use the following information) suppose that:
The cost of debt (rd) is 3.75% (before tax),
Flotation costs (F) = 7% of issue price,
The debt is trading at $1,022.00,
There are 7,250 bonds outstanding,
The tax rate is .32,
The LAST dividend paid yesterday (D0 ) = $4.66,
The expected constant growth rate (g) = 2.75%,
Beta = 1.65,
rRF = 1.04%,
RPm = 4.5%, (market risk premium)
The firm has 200,000 shares of common stock outstanding,
Common stock shares are trading at $47.34/share (P0).
Required - What is the cost of existing common equity (retained earnings)?
What is the cost of NEW common equity?
What is the firm's WACC using existing common equity?