Calculate after tax cost of debt

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Question - Jury Company wants to calculate the component costs in its capital structure.

Common stock currently sells for $27 and is expected to pay a dividend of $0.50.

Jury's dividend growth rate is 8%, and flotation cost is $1.25.

Preferred stock sells for $46, pays a dividend of $4.00, and carries a flotation cost of $1.10.

Jury Company bonds yield 9% in the market. Jury is in the 40% tax bracket.

Calculate after tax cost of debt, cost of common equity (retained earnings), cost of new common stock, & cost of preferred stock.

Reference no: EM132845241

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