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The following table gives Foust Company's earnings per share for the last 10 years. The...

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Finance

The following table gives Foust Company's earnings per share for the last 10 years. The common stock, 6.6 million shares outstanding, is now (1/1/20) selling for $70.00 per share. The expected dividend at the end of the current year (12/31/20) is 50% of the 2019 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.)

Year EPS Year EPS 2010 $3.90 2015 $5.73 2011 4.21 2016 6.19 2012 4.55 2017 6.68 2013 4.91 2018 7.22 2014 5.31 2019 7.80 The current interest rate on new debt is 10%; Foust's marginal tax rate is 25%; and its target capital structure is 40% debt and 60% equity.

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

%

Calculate Foust's cost of common equity. Calculate the cost of equity as rs = D1/P0 + g. Do not round intermediate calculations. Round your answer to two decimal places.

%

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

%

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