?(Individual or component costs of capital?) Compute the cost of the? following:
b. A new common stock issue that paid a ?$1.50 dividend last year. The par value of the stock is? $15, and earnings per share have grown at a rate of 7 percent per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant? dividend-earnings ratio of 30 percent. The price of this stock is now ?$26 ?, but 5 percent flotation costs are anticipated. What is the cost of external common? equity?________%
c. Internal common equity when the current market price of the common stock is ?$48 . The expected dividend this coming year should be ?$3.50 ?, increasing thereafter at an annual growth rate of 7 percent. The? corporation's tax rate is 38 percent. What is the cost of internal common? equity? ________%
d. A preferred stock paying a dividend of 12 percent on a ?$110 par value. If a new issue is? offered, flotation costs will be 14 percent of the current price of ?$174 . What is the cost of capital for the preferred? stock?_________%
e. A bond selling to yield 8 percent after flotation? costs, but before adjusting for the marginal corporate tax rate of 38 percent. In other? words, 8 percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows? (principal and? interest). What is the? after-tax cost of debt on the? bond? ________%