18.) SheetRockMining presents the following information: Price of common stock: $54.00 Price of preferred stock: $12.80 Last paid common dividend: $4.50 Last paid preferred dividend: $1.08 Flotation cost on all shares: $1.22 Expected growth rate: 4.3% Tax rate: 39% Determine the cost of retained earnings.

		12.99%
		7.09%
		10.25%
		11.11%
		none of the above

19.) A zero coupon bond matures in 7 years and sells for $695. If the tax rate is 38% and there is a $9.00 flotation cost, what is the cost of debt?

		4.958%
		3.276%
		2.452%
		3.383%
		none of the above

20.) A firm has a lender lined up to provide funding. Bank A charges an interest rate of 8% with a $450,000 limit. Bonds could also be issued at a 10% yield. The firm has 435,000 of available retained earnings at a cost of 11.6%. Preferred stock can be issued at 11% and new common shares can be issued at 12%. If the tax rate is 41%, determine the second WACC in the MCC schedule. (capital structure: 40% debt, 10% preferred, and 50% common equity)

		9.46%
		9.95%
		10.27%
		8.99%
		none of the above