1. Suppose that a firm has preferred stock that currently trades for $123.45 per share, pays an annual dividend of $6.7, that the dividends do not grow over time, and has a flotation cost of 8.9%. What is the annual, after-flotation cost of the firm's preferred stock?
a. 4.61 %
b. 5.44 %
c. 5.96 %
d. 6.42 %
2. Suppose your firm wishes to finance a project with common stock. The risk free rate is 4%, the market return is 15%, and your firm's beta is equal to 1.65. What is your firm's cost of common stock (kCS)?
a. 14.85%
b. 15.05%
c. 19.27%
d. 22.15%