11.

The after-tax cost of debt is:

A. 3.9%.

B. 4.2%.

C. 4.5%.

D. 5.1%.

12.

The cost of common equity is:

A. 9.0%.

B. 12.0%.

C. 9.0%.

D. 15.1%.

13.

The after-tax cost of preferred stock capital is:

A. 5.0%.

B. 5.6%.

C. 5.9%.

D. 6.3%.

An analyst gathers the following data about a company: A target capital structure of 10% preferred stock, 50% common equity, and 40% debt. Outstanding 20-year, annual-pay, 6% coupon bonds selling for $894. Common stock selling for $50 per share that is expected to grow at 8% and expected to pay a $2 dividend. There is a 10% flotation fee on the sale of new common stock. The company's 5%, $100 par preferred stock currently sells for $90. The company's tax rate is 40%