A firm can issue a 30-year, $1,000 par, semiannual bond with an 8% coupon rate at price of $1,124.72. Its marginal tax rate is 35%. The firms beta is 1.5, and the required return on the market is 12%, and the risk-free rate is 7%. The firm just paid their annual dividend of $2.25 and their constant growth rate is 8% annually. Their stock is currently valued at $23.00. Flotation costs of 10% per share will be incurred on new common stock issues. The firm can sell new preferred stock with a dividend of $10, at a price of $125, and with a flotation cost of $10 per share. Estimate the firms Cost of New Common Stock.

13.25%

14.79%

16.27%

17.68%

19.74%