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1. The Clause Solution, Inc., a residential window and door manufacturer, has the following historical record of earnings per share (EPS) from 2013 to 2017:
2. The companys payout ratio has been 60% over the last five years and the last quoted price of the firms stock was $10. Flotation costs for new equity will be 7%. The company has 30,000,000 common shares outstanding and a debt-equity ratio of 0.50.

	2017	2016	2015	2014	2013
EPS	$1.10	$1.05	$1.00	$0.95	$0.90

1. If dividends are expected to grow at the same arithmetic average growth rate of the last five years, what is the dividend payment in 2018?
2. Calculate the firms cost of retained earnings and the cost of new common equity using the constant growth dividend discount model.
3. If the Clause Solutions after-tax cost of debt is 9%, what is the WACC with retained earnings? With new common equity?

I will provide the template below, PLEASE show calculations

Open recovered workbooks? Your recent changes were saved. Do you want to continue Office Update To keep up-to-date with security updates, fixes, and improvements, cho x fx F G B 2015 $1.00 2014 $0.95 2013 $0.901 EPS Payout Ratio Stock Price Flotation Costs (Equity) Shares Outstanding Debt-Equity Ratio The Clause Solution, Inc. 2017 2016 $1.10 $1.05 60% $10.00 7% 30,000,000 0.50 33.33% WeightDebt WeightEquity 66.67% 9.00% After-tax Cost of Debt 2017 2016 2015 2014 2013 EPS Growth Rate Average EPS Growth Rate a) Dividend2018 Cost of RE Cost of New Equity 1 WACC c) With Retained Earnings With New Equity 1 1 1 #1 #2 #3 #4 Select destination and press ENTER or choose Paste

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