Costly Corporation is considering using equity financing. Currently, the firm's stock is selling for $68.00 per share. The firm's dividend for next year is expected to be $3.80 with an annual growth rate of 6.0% thereafter indefinitely. If the firm issues new stock, the flotation costs would equal 12.0% of the stock's market value. The firm's marginal tax rate is 40%. What is the firm's cost of internal equity?

Question 23 options:

	11.59%
	12.35%
	11.92%
	12.73%
	10.92%

Marginal Incorporated (MI) has determined that its after-tax cost of debt is 10.0%. Its cost of preferred stock is 14.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $325 million of debt, $50 million of preferred stock, and $125 million of common equity. The firm's marginal tax rate is 45%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $62 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $298 million?

Question 24 options:

12.28%

11.90%

12.65%

9.73%

8.98%