1. 2. What is the cost of debt and retained earnings if the interest rate is 10 per- +$12cent, the federal corporate income tax rate is 30. percent, the firm's antici- pated growth rate is 12 percent, the current dividend is $0.50, and price of the stock is $12? Tesigns to mas bon b. What is the weighted-average cost of capital if the firm uses 24 percent debt and 76 percent equity? reada 11 7 c. If the firm has limited funds available, such as limited earnings and re- tained earnings, then additional funds will cost more. The firm has $2,300,000 in retained earnings, after which it will have to issue new eguirshares. How much total funding can it obtain before it must issue addi- datdational shares if equity constitutes 76 percent in the firm's capital structure? d. If the firm exhausts its retained earnings and must issue additional shares, the cost of equity includes flotation costs. If these costs are $1 per share, what is the cost of new equity? ruine ROTTER e. What is the firm's cost of capital if it must issue additional shares? CL - C-11

1. a. What is the cost of debt and retained earnings if the interest rate is 10 percent, the federal corporate income tax rate is 30 percent, the firm's anticipated growth rate is 12 percent, the current dividend is $0.50, and price of the stock is $12 ? b. What is the weighted-average cost of capital if the firm uses 24 percent debt and 76 percent equity? c. If the firm has limited funds available, such as limited earnings and retained earnings, then additional funds will cost more. The firm has $2,300,000 in retained earnings, after which it will have to issue new shares. How much total funding can it obtain before it must issue additional shares if equity constitutes 76 percent in the firm's capital structure? d. If the firm exhausts its retained earnings and must issue additional shares, the cost of equity includes flotation costs. If these costs are \$1 per share, what is the cost of new equity? e. What is the firm's cost of capital if it must issue additional shares