Problem
1. A 20-year corporate bond of $2000 is issued at 8 ½% coupon rate and is sold at 2 ¾% discount with a flotation cost of 1 ¾%. What would be the cost of capital?
2. If the price of a certain stock is $56.00 with a potential annual growth rate of 5 ¾% what would be the cost of equity capital if the DPS in this firm is $9.80?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.