Company A has the following capital structure, which considers to be optimal:

Debt = $50,000

Preferred Stock = $20,000

Common Equity from retained earnings = $15,000

Common Equity (new stocks) = ?

Total Liabilities & Equity = $100,000

The following information is relevant to Company A

Before-tax cost of debt is 12%.

The tax rate is 35%.

Preferred stock with a dividend of $2 is currently sold to the public at a price of $30 per share.

The common stocks last dividend paid was $1 per share, and its common stock currently sells for $35 per share, and dividends are expected to grow at a constant rate of 8%.

The company can obtain new capital by selling new common stock to the public with a flotation cost of 11%.

7. Company's A cost of common equity from retained earnings is: *

A. 2.85%

B. 3.085%

C. 10.85%

D. 0%

E. None of the above

8. Company's A cost of common equity from issuing new stocks is: *

A. 3.21%

B. 3.46%

C. 11.21%

D. 11.46%

E. None of the above

9. Company's A weighted average cost of capital is: *

A. 8.54%

B. 7.41%

C. 10.91%

D. 6.89%

E. None of the above