Reference no: EM132821419

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

1. Common stock currently sells for $27 and is expected to pay a dividend of $0.50.
2. Jury's dividend growth rate is 8%, and flotation cost is $1.25.
3. Preferred stock sells for $46, pays a dividend of $4.00, and carries a flotation cost of $1.10.
4. Jury Company bonds yield 9% in the market. Jury is in the 40% tax bracket.

Problem 1: Calculate after tax cost of debt, cost of common equity (retained earnings), cost of new common stock, & cost of preferred stock.