1. The firm can raise debt by selling $5,000-par-value, 8% coupon interest rate, 20-year bonds on which annual interest payments will be made. To sell the issue, an average discount of $30 per bond would have to be given. The firm also must pay flotation costs of $30 per bond. If the tax rate is 35%, what is the after-tax cost of debt? 4 points 2. Mavis Taylor Corporation has just issued preferred stock. The stock has a 6% annual dividend and a $100 par value, and was sold at $98.5 per share. Flotation costs were an additional $3 per share. a. Calculate the cost of the preferred stock. 2 points b. If the firm sells the preferred stock with a 10% annual dividend and net $93.00 after flotation costs, what is its cost? 2.5 points 3. Jones Corp. paid a $3.50 dividend last year. At a constant growth rate of 5 percent, what is the value of the common stock if the investors require a 20 percent rate of return? If the required rate of return decreases by 3%, what will be the value of the stock? 2.5 points 4. The common stock for the Great Eastern Corporation sells for $58 a share. Last year the firm paid a $4 dividend, which is expected to continue to grow 4.5 percent per year into the indefinite future. If the firm's tax rate is 22 percent, what is the firm's cost of common equity? 3 points 5. You are working as a consultant to the Crawford Company, and you have been asked to compute the appropriate discount rate to use in the evaluation of the purchase of a new warehouse facility. You have determined the market value of the firm's current capital structure (which the firm considers to be its target mix of financing sources) as follows: Source of Capital Market Value Bonds Preferred stock Common stock $350,000 $600,000 $540,000 To finance the purchase, Crawford will sell 20-year bonds with a $1,000 par value paying 6 percent per year (with interest paid annually) at the market price of $1,045. Preferred stock paying a $2.50 dividend can be sold for $35. Common stock for Crawford is currently selling for $50 per share. The firm paid a $5.25 dividend last year and expects dividends to continue growing at a rate of 4 percent per year for the indefinite future. The firm's marginal tax rate is 34 percent. What discount rate should you use to evaluate the warehouse project (compute for WACC 2.5 points)? Please compute first for the individual costs of the following: preferred stock - 2 points, Equity - 2.5 points, and debt 3.5 points)