5 pc QUESTION 13 A company's perpetual preferred stock currently sells for $88 per share, and pays an annual dividend of $3.00. In issuing the preferred shares, the company incurs flotation costs of 12%. The company's cost of preferred stock is % (to two decimal places) QUESTION 14 Sugar Ray Co. just paid a dividend of Do - $1.50. Analysts expect the company's dividend to grow by 25% this year, by 25% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The required return on this low-risk stock is 14%. What is the best estimate of the stock's current market value, $ xxx.xx, no $ sign? QUESTION 15 5 You were hired as a consultant to restructure operating capital. The recommended goal is for the firm to have a capital structure is 33% debt, 8% preferred, and 59% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new stock. The firm's projected WACC is %