1. The coupon rate on a debt issue is 7%. If the yield to maturity on the debt is 8%, what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 41%? (Round your answer to 2 decimal places.)
3.37%
6.07%
4.72%
6.87%
2. Expected cash dividends are $3.00, the dividend yield is 8%, flotation costs are 3% of price, and the growth rate is 3%. Compute cost of new common stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
11.00%
12.25%
13.35%
11.25%
3. A firm's stock is selling for $87. The next annual dividend is expected to be $2.00. The growth rate is 5%. The flotation cost is $3. What is the cost of retained earnings? (Round your answer to 2 decimal places.)
5.95%
8.75%
7.30%
5.15%