A) The coupon rate on a debt issue is 8%. If the yield to maturity on the debt is 9%, what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 41%?

a. 3.96%

b. 5.31%

c. 7.46%

d. 6.66%

B) Expected cash dividends are $5.00, the dividend yield is 5%, flotation costs are 8% of price, and the growth rate is 4%. Compute the approximate cost of new common stock.

a. 9.43%

b. 9.18%

c. 10.43%

d. 11.53%