Bonds: Builtrite is planning on offering a $1000 par value, 20 year, 7% coupon bond with an expected selling price of $1025

Flotation costs would be $55 per bond.

Preferged Stock: Builtrite could sell a $46 par value preferred with a 7% coupon for $38 a share. Flotation costs would be $2 a share

Common stock: Currently, the stock is selling for $62 a share and has paid a $2.82 dividend. Dividends are expected to continue owing at 12%. Flotation costs would be $3.75 a share and Builtrite has $350,000 in available retained earnings.

Assume a 25% tax bracket.

Their after-tax cost of debt is:

O18.00%

O17.42%

O17.07%

O 16.84%