a. A $1,000 par value bond with a market price of $940 and a coupon interest rate of 7 percent. Flotation costs for a new issue would be approximately 8 percent. The bonds mature in 8 years and the corporate tax rate is 35 percent.

b. A preferred stock selling for $103 with an annual dividend payment of $8.The flotation cost will be $7 per share. The company's marginal tax rate is 30 percent.

c. Retained earnings totaling $4.8 million. The price of the common stock is $71 pershare, and dividend per share was $8.24 last year. The dividend is not expected to change in the future.

d. New common stock for which the most recent dividend was $2.83. The company's dividends per share should continue to increase at a growth rate of 7 percent into the indefinite future. The market price of the stock is currently $47 however, flotation costs of $6 per share are expected if the new stock is issued.