1. Mars Inc. Target Capital structure is 40 % debt and 60% Equity. If the cost debt is 9% pa before tax and the tax rate is 40%. The CEO has calculated the WACC to be 9.96%. What is the cost of Equity.

2. Tunney Industries is in the process of Issuing preferred stock at a price of 50/ each. The stock will pay a dividend of 3.80 per share. The floatation costs on the issue is estimated to be 5% of the price. What is the cost of Preferred stock.