Whatley Inc. has a target capital structure consisting of 35% debt, 10% preferred stock, and...
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Whatley Inc. has a target capital structure consisting of 35% debt, 10% preferred stock, and 55% common equity The firm has 20-year, 8.4% semiannual coupon bonds that sell for $920.50. Whatley also has preferred stock that pays an 8.4% annual dividend (with a par value of $100) and sells for $75. Finally, Whatley plans to pay an annual dividend of $2 on its common stock that currently sells for $21 a share. Whatley's stock is a constant growth stock with a growth rate of 5%. Flotation costs on new common stock are 10%, and the firm's marginal tax rate is 25%. What is Whatley's after-tax component cost of debt? (7 points) a b. What is Whatley's component cost of preferred stock? What is Whatley's component cost of retained earnings? Assume that Whatley can use their retained earnings to fund the equity portion of its capital budget, what is their WACC
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