1. A stock’s beta is .84, the tax rate is 31%, and the market risk premium is 5.2% per year. The company’s common stock has a market value of $42.71 per share and its last dividendiwas $1.98 per share. The yield to maturity for the company’s long-term debt is 9.1% per year. The company's dividends are expected to grow at a forever constant rate of 5.5% per year. If the flotation costs for common stock are 6%, what is the company's annual cost of common stock financing?
2. A stock’s beta is .87, the tax rate is 31%, and the market risk premium is 5.9% per year. The company’s common stock has a market value of $78.43 per share and its next dividend is expected to be $6.09 per share. If the company's dividends are expected to grow at a constant rate of 7.1% per yearand the tax rate is 39% , what is the company’s annual cost of internal equity financing?