A company's perpetual preferred stock pays a $1.2 annual dividend and currently sells for $17 per share. If the company were to sell new preferred stock, it would incur a flotation cost of 5% of the issue price. What is the firm's cost of preferred stock?

Amazon has a beta of 0.9. The risk-free rate is 2.8% and the expected return on the S&P500 is 5%.

What is Amazon's cost of equity? Now assume that the expected market risk premium is 5%. What is Amazon's cost of equity?