Assume $xYZ$ Corporation estimates that it can issue $($a$)$ debt at a pretax rate of $r_d=8\%$ and its tax rate is $25\%$; $($b$)$ can issue preferred stock which pays a constant dividend of $$3\mathrm{.}00$ per share & preferred shares sell at $$36$ per share; $($c$)$ its common stock currently sells for $$28$ per share with an annual dividend of $$2\mathrm{.}50$ per share and dividend growth will be constant at $5\%$ per annum. The capital structure of the company is $40\%$ debt, $10\%$ preferred stock and $50\%$ common stock.

The after$-$tax cost of debt is $q,$ ; cost of preferred stock is $q,$ and cost of common stock $($retained earnings$)$ is $q,$ for the company respe

a$.$ Debt $=\mathrm{.}024$; Preferred $=\mathrm{.}083$; Common $=\mathrm{.}05$

b$.$ Debt $=\mathrm{.}035$; Preferred $=\mathrm{.}09$; Common $=\mathrm{.}05$

c$.$ Debt $=\mathrm{.}22$; Preferred $=\mathrm{.}30$; Common $=\mathrm{.}07$

d$.$ Debt $=\mathrm{.}28$; Preferred $=\mathrm{.}10$; Common $=\mathrm{.}08$