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Debt rate for this firm = 7% Tax rate = 27% Preferred Dividend = $6.00 Price Preferred Stock = $48.00 Common Dividends at t 1

Debt rate for this firm = 7%

Tax rate = 27%

Preferred Dividend = $6.00

Price Preferred Stock = $48.00

Common Dividends at t₁ = $3.00

Price of Common Stock = $32.00

Growth rate of dividends = 3%

Flotation costs = 4% of price

Calculate the after-tax cost of debt (expressed as a percentage with one decimal i.e. xx.x%).

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