Coogly Company is attempting to identify its weighted average cost of capital for the coming year and has hired you to answer some questions they have about the process. They have asked you to present this information in a PowerPoint presentation to the company’s management team. The company would like for you to keep your presentation to approximately 10 slides and use the notes section in PowerPoint to clarify your point. Your presentation should address the following questions and offer a final recommendation to Coogly. Make sure you support your answers and clearly explain the advantages and disadvantages of utilizing the weighted average cost of capital methodology. Include at least one graph or chart in your presentation.

Company Information
The capital structure for the firm will be maintained and is now 10% preferred stock, 30% debt, and 60% new common stock. No retained earnings are available. The marginal tax rate for the firm is 40%.
A. Coogly has outstanding preferred stock That pays a dividend of $4 per share and sells for $82 per share, with a floatation cost of $6 per share. What is the component cost for Coogly's preferred stock? What are the advantages and disadvantages of using preferred stock in the capital structure?
B. If the company issues new common stock, it will sell for $50 per share with a floatation cost of $9 per share. The last dividend paid was $3.80 and this dividend is expected to grow at a rate of 7% for the foreseeable future. What is the cost of new equity to the firm? What are the advantages and disadvantages of issuing new equity in the capital structure?
C. The company will use new bonds for any capital project, according to the capital structure. These bonds will have a market and par value of $1000, with a coupon rate of 6% and a floatation cost of 7%. The bonds will mature in 20 years and no other debt will be used for any new investments. What is the cost of new debt? What are the advantages and disadvantages of issuing new debt in the capital structure?
D. Given the component costs identified above and the capital structure for the firm, what is the weighted average cost of capital for Coogly? What are the advantages and disadvantages of using this method in the capital budgeting process?

Title Slide: Coogly Company's Weighted Average Cost of Capital

Slide 1: Introduction
- Briefly introduce the concept of weighted average cost of capital (WACC).
- Explain that WACC is the average rate of return a company needs to earn in order to cover its financing costs.

Slide 2: Capital Structure
- Present Coogly's capital structure: 10% preferred stock, 30% debt, and 60% new common stock.
- Explain that no retained earnings are available for the company.
- Mention that the marginal tax rate for the firm is 40%.

Slide 3: Cost of Preferred Stock
- Calculate the component cost for Coogly's preferred stock.
- Use the formula: Preferred Stock Cost = Dividend / Market Price - Floatation Cost.
- Explain the advantages and disadvantages of using preferred stock in the capital structure.

Slide 4: Cost of New Equity
- Calculate the cost of new equity to the firm.
- Use the Dividend Growth Model: Cost of Equity = Dividend / Market Price + Growth Rate.
- Discuss the advantages and disadvantages of issuing new equity in the capital structure.

Slide 5: Cost of New Debt
- Determine the cost of new debt for Coogly.
- Consider the market and par value of the bonds, coupon rate, and floatation cost.
- Use the formula: Cost of Debt = Coupon Rate * (1 - Tax Rate) - Floatation Cost.
- Explain the advantages and disadvantages of issuing new debt in the capital structure.

Slide 6: Weighted Average Cost of Capital (WACC)
- Calculate the WACC for Coogly by weighting the costs of each capital component.
- Use the formula: WACC = (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Equity * Cost of Equity) + (Weight of Debt * Cost of Debt).
- Present the final calculation of WACC for the company.

Slide 7: Graph or Chart
- Include a graph or chart illustrating the capital structure and the weights of each component.
- Visualize the proportions of preferred stock, equity, and debt.

Slide 8: Advantages of Using WACC
- Discuss the advantages of utilizing the weighted average cost of capital methodology.
- Provides a comprehensive measure of the company's cost of capital.
- Helps in evaluating the profitability of potential projects.
- Aids in making sound financial decisions for the firm.

Slide 9: Disadvantages of Using WACC
- Explain the limitations of WACC as a capital budgeting tool.
- Assumes constant capital structure, which may not reflect reality.
- Ignores potential risks associated with different sources of financing.
- Relies on various assumptions that may not be accurate in all scenarios.

Slide 10: Final Recommendation to Coogly
- Summarize the presentation and provide a final recommendation on Coogly's weighted average cost of capital.
- Evaluate the calculated WACC and compare it to the company's desired rate of return or other investment opportunities.

Closing Slide: Thank you
- Acknowledge the audience and thank them for their attention.
- Encourage questions and comments from the management team.