Problem A

1 Net Proceeds 980.00

2 Cost of debt (before tax) 0.12

Tax Rate 0.70
Cost of debt (after tax) 0.09
3 121.33
990.00
Approximate cost of debt (before tax) 0.12
Tax Rate 0.70
Cost of debt (after tax) 0.09

Problem B
4 Cost of preferred stock 0.16

Problem C
5 Cost of preferred stock 0.11

Problem D
6 Cost of common stock equity 0.15

Problem E
7 Net Proceeds 52.00
8 Cost of retained earnings 0.12
9 Cost of new common stock 0.13

Problem F
10 Weighted Cost WACC
Debt 0.55 0.067 0.04
Preferred stock 0.10 0.092 0.01
Common stock 0.35 0.106 0.04
0.08