Start with the partial model in the file Ch09 P18 Build a Model.xlsx on the textbook’s Web site. The stock of Gao Computing sells for $50, and last year’s dividend was $2.10. A flotation cost of 10% would be required to issue new common stock. Gao’s preferred stock pays a dividend of $3.30 per share, and new preferred stock could be sold at a price to net the company $30 per share. Security analysts are projecting that the common dividend will grow at a rate of 7% a year. The firm can issue additional long-term debt at an interest rate (or a before-tax cost) of 10%, and its marginal tax rate is 35%. The market risk premium is 6%, the risk-free rate is 6.5%, and Gao’s beta is 0.83. In its cost-of-capital calculations, Gao uses a target capital structure with 45% debt, 5% preferred stock, and 50% common equity.a. Calculate the cost of each capital component—in other words, the after-tax cost of debt, the cost of preferred stock (including flotation costs), and the cost of equity (ignoring flotation costs). Use both the CAPM method and the dividend growth approach to find the cost of equity.b. Calculate the cost of new stock using the dividend growth approach. c. What is the cost of new common stock based on the CAPM? (Hint: Find thedifference between re and rs as determined by the dividend growth approach andthen add that difference to the CAPM value for rs.) d. Assuming that Gao will not issue new equity and will continue to use the same targetcapital structure, what is the company’s WACC? e. Suppose Gao is evaluating three projects with the following characteristics.(1) Each project has a cost of $1 million. They will all be financed using the target mix of long-term debt, preferred stock, and common equity. The cost of the common equity for each project should be based on the beta estimated for the project. All equity will come from reinvested earnings.(2) Equity invested in Project A would have a beta of 0.5 and an expected return of 9.0%. (3) Equity invested in Project B would have a beta of 1.0 and an expected return of 10.0%. (4) Equity invested in Project C would have a beta of 2.0 and an expected return of 11.0%.f. Analyze the company’s situation, and explain why each project should be accepted or rejected.

Prior to beginning work on this assignment, read the articles The 5 Biggest Corporate Scandals of 2016 (Links to an external site.) and The 10 Biggest Business Scandals of 2017 (Links to an external site.).You will be writing an eight- to 10-page paper (not including title or reference pages) focused on current events that applies topics covered in this course related to recognized uses and uses you can envision.The articles this week focus on business or corporate scandals. Choose one business or corporate scandal from either The 10 Biggest Business Scandals of 2017 (Links to an external site.) or The 5 Biggest Corporate Scandals of 2016 (Links to an external site.) to research and review.In your paper,Explain whether the organization acted socially and ethically responsible regarding the incident.Describe what the organization should or could have done differently.Describe who or what was responsible for the incident.Explain the best way to ensure that such incidents do not recur, if possible.Recommend the best way for society, and stakeholders, to prevent future incidents of this type.*Note: You are encouraged to integrate any feedback from your instructor and upload the assignment to Portfolium. For assistance using Portfolium, review the Portfolium Student Guide.The Final Case Analysis: Organizational Ethical Dilemmas Final PaperMust be eight to 10 double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center’s APA Style (Links to an external site.)Must include a separate title page with the following:Title of paperStudent’s nameCourse name and numberInstructor’s nameDate submittedFor further assistance with the formatting and the title page, refer to APA Formatting for Word 2013 (Links to an external site.).Must utilize academic voice. See the Academic Voice (Links to an external site.) resource for additional guidance.Must include an introduction and conclusion paragraph. Your introduction paragraph needs to end with a clear thesis statement that indicates the purpose of your paper.For assistance on writing Introductions & Conclusions (Links to an external site.) as well as Writing a Thesis Statement (Links to an external site.), refer to the Ashford Writing Center resources.Must critically address the paper topic. That is, positively or negatively respond to the content and then defend your position. If multiple positions are present and are being rejected, you must also defend rejecting them.Must use at least four scholarly sources in addition to the course text.The Scholarly, Peer-Reviewed, and Other Credible Sources (Links to an external site.) table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a particular assignment.Must document any information used from sources in APA style as outlined in the Ashford Writing Center’s Citing Within Your Paper (Links to an external site.)Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center. See the Formatting Your References List (Links to an external site.) resource in the Ashford Writing Center for specifications.