Find what is the cost of preferred stock

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Question 1. Internal common equity where the current market price of the common stock is $43. The expected dividend this coming year should be $3.50, increasing thereafter at a 7 percent annual growth rate. The corporation's tax rate is 34 percent. What is the cost of common stock?

Question 2. A preferred stock paying a 9 percent dividend on a $150 par value. If a new issue is offered, flotation costs will be 12 percent of the current price of $175. What is the cost of preferred stock?

Reference no: EM132498286

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