1. (Individual or component costs of capital) Compute the costs for the following sources of financing:

a. A $ 1,000 par value bond with a market price of $ 960 and a coupon interest rate of 7 percent. Flotation costs for a new issue would be approximately 8 percent. The bonds mature in 14 years and the corporate tax rate is 36 percent.

b. A preferred stock selling for $ 106 with an annual dividend payment of $ 7. The flotation cost will be $ 9 per share. The company's marginal tax rate is 30 percent.

c. Retained earnings totaling $ 4.8 million. The price of the common stock is $ 74 per share, and dividend per share was $ 8.34 last year. The dividend is not expected to change in the future.

d. New common stock for which the most recent dividend was $ 2.65. The company's dividends per share should continue to increase at a growth rate of 8 percent into the indefinite future. The market price of the stock is currently $ 51; however, flotation costs of $ 6 per share are expected if the new stock is issued.

a. What is the firm's after-tax cost of debt on the bond? % (Round to two decimal places.) ANSWER:

b. What is the cost of capital for the preferred stock? % (Round to two decimal places.) ANSWER:

c. What is the cost of internal common equity? % (Round to two decimal places.) ANSWER:

PLEASE ANSWER THE QUESTION FULLY AND CORRECTLY!!

d. What is the cost of external common equity? % (Round to two decimal places.) ANSWER: