A) Alpha Inc. perpetual preferred stock is selling for $100 per share and has a par value of $150. It pays a constant dividend of 8.0%. The firms marginal tax rate is 40%. What is the cost of preferred stock?

A. 5.33%

B. 7.20%

C. 12.00%

B) Alpha Inc. common stock is selling for $50 per share. The beta of the stock is 1.75 and the risk-free rate is 3.0%. The expected return on the market is 7.0%. The firms marginal tax rate is 35%. What is the cost of common equity?

A. 6.5%

B. 10.0%

C. 15.25%