You are a consultant to a growing technology company that is contemplating a change in its design. The company is currently set up as a functional structure. The organization is growing rapidly but is showing signs of strain. For example, top managers are seeing a substantial rise in the number of complaints from customers about the innovativeness of their latest products when compared to the competition. The company operates in an environment that is changing rapidly and is quite complex. The firm has recently expanded to several new geographic markets, and it has introduced several new products within these markets. The firm’s strategy has historically been based on keeping costs low and underpricing the competition and top management is hesitant to change their low-cost approach. Based on your understanding of contingency theory, what are your recommendations? Explain why.

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