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1. CosaNostra Pizza is undergoing a major expansion. The expansion will be financed by issuing new 26-year, $1,000 par, 9% semiannual coupon bonds. The market

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1. CosaNostra Pizza is undergoing a major expansion. The expansion will be financed by issuing new 26-year, $1,000 par, 9% semiannual coupon bonds. The market price of the bonds is $775 each. Flotation expense on the new bonds will be $90 per bond. The marginal tax rate is 35%. What is the post-tax cost of debt for the newly-issued bonds? 2. Fedland Inc. will issue new common stock to finance an expansion. The existing common stock just paid a $1.75 dividend, with dividends expected to grow at a constant rate of 4% indefinitely. The stock sells for $50 and flotation expenses of 4% of the selling price will be incurred on new shares. What is the cost of new common stock? 3. YT Inc. will issue new common stock to finance an expansion. The existing common stock just paid a $3.25 dividend. Dividends are expected to grow at a constant rate of 5.5% indefinitely. The stock sells for $38 and flotation expenses of 8% of the selling price will be incurred on new shares. What is the cost of internal equity? 4. Hiro Corp. common stock is selling for $18 per share. The last dividend was $1.40, and dividends are expected to grow at a 8.5% annual rate. Flotation costs on new stock sales are 10% of the selling price. What is the cost of Hiro Inc.'s new common stock

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