What is the cost of internal common? equity

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Compute the cost of the? following:

Point 1: Internal common equity when the current market price of the common stock is ?$52. The expected dividend this coming year should be ?$3.50?, increasing thereafter at an annual growth rate of 12 percent. The? corporation's tax rate is 33 percent.

Point 2: A preferred stock paying a dividend of 9 percent on a ?$150 par value. If a new issue is? offered, flotation costs will be 16 percent of the current price of ?$162.

Point 3: A bond selling to yield 12 percent after flotation? costs, but before adjusting for the marginal corporate tax rate of 33 percent. In other? words,12 percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows? (principal and? interest).

Question 1: What is the cost of internal common? equity?

Question 2: What is the cost of capital for the preferred? stock?

Question 3: What is the? after-tax cost of debt on the? bond?

Reference no: EM132488595

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