Question: Calculate the component costs of debt, preferred stock, and common stock. Will these costs be constant irrespective of the amount of capital raised? Please explain.
Table
Expected Growth Rate of Sales ....................................... 25%
Expected Growth Rate of Earnings and Dividends .......... 12%
Expected Return on the Market........................................ 5%
Treasury bill rate..............................................................6%
Expected retention rate ...................................................60%
Firm's Equity Beta .......................................................... 1.2