Diaz Company reports the following variable costing income statement for its single product. This company’s sales totaled 50,000 units, but its production was 80,000 units. It had no beginning finished goods inventory for the current period. DIAZ COMPANY Income Statement (Variable Costing) Sales (50,000 units × $60 per unit) $ 3,000,000 Variable expenses Variable manufacturing expense (50,000 units × $28 per unit) 1,400,000 Variable selling and admin. expense (50,000 units × $5 per unit) 250,000 Total variable expenses 1,650,000 Contribution margin 1,350,000 Fixed expenses Fixed overhead 320,000 Fixed selling and administrative expense 160,000 Total fixed expenses 480,000 Net income $ 870,000 1. Convert Diaz's variable costing income statement to an absorption costing income statement.

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