Blue africa inc. produces laptops and desktop computers. the company’s production activities mainly occur in what the company calls its laser and forming departments. the cafeteria and security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. the total cost of the security department is $247,000. the total cost of the cafeteria department is $343,000. the number of employees and the square footage in each department are as

employees square feet
security department 10 570
cafeteria department 24 2,400
laser department 40 2,400
forming department 50 3,200
using the reciprocal services method of support department cost allocation, determine the total costs from the security department that should be allocated to the cafeteria department and to each of the production departments.

cafeteria
department laser
department forming
department
security department cost allocation $ $ $

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. calculate the cost of new stock using the dividend growth approach. what is the cost of new common stock based on the capm? (hint: find the difference between re and rs as determined by the dividend growth approach and then add that difference to the capm value for rs.)assuming that gao will not issue new equity and will continue to use the same target capital structure, what is the company’s wacc? e. suppose gao is evaluating three projects with the following characteristics. 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. equity invested in project a would have a beta of 0.5 and an expected return of 9.0%.equity invested in project b would have a beta of 1.0 and an expected return of 10.0%.equity invested in project c would have a beta of 2.0 and an expected return of 11.0%.analyze the company’s situation, and explain why each project should be accepted or rejected g