Calculate the after-tax cost of preferred stock for Marriot Hotel Corporation, which is planning to sell $200 million of $6.50 cumulative preferred stock to the public at a price of $65 per share. Flotation costs are $5 per share. Marriot has a marginal income tax rate of 40%. O 10.00% O 6.50% O 6.00%

10.83%

The stock of Gilead Sciences, Inc., is expected to return 28% annually, and the stock of Sorrento Therapeutics, Inc., is expected to return 16% annually. The beta of the Gilead Sciences stock is 1.80, and the beta of the Sorrento Therapeutics stock is 2.75 . The risk-free rate of return is expected to be 2%, but the return on the market portfolio is 18%. Based on the Security Market Line (SML), what are the required rates of return for Gilead Sciences and Sorrento Therapeutics given the current market situation?

The required rate of return for Gilead Sciences is 34.40%, and that for Sorrento Therapeutics is 51.50%. The required rate of return for Gilead Sciences is 30.80%, and that for Sorrento Therapeutics is 46.00%. The required rate of return for Gilead Sciences is 32.40%, and that for Sorrento Therapeutics is 49.50%. The required rate of return for Gilead Sciences is 28.80%, and that for Sorrento Therapeutics is 44.00%.