Edna Recording Studios, Inc., reported earnings available to common stock of

$5,000,000

last year. From those earnings, the company paid a dividend of

$1.15

on each of its

1,000,000

common shares outstanding. The capital structure of the company includes

45%

debt,

10%

preferred stock, and

45%

common stock. It is taxed at a rate of

30%.

If the market price of the common stock is

$31

and dividends are expected to grow at a rate of

9%

per year for the foreseeable future, what is the company's cost of retained earnings

financing 13.04

If underpricing and flotation costs on new shares of common stock amount to

$7

per share, what is the company's cost of new common stock

financing 14.22

The company can issue

$1.65

dividend preferred stock for a market price of

$35

per share. Flotation costs would amount to

$5

per share. What is the cost of preferred stock

financing 5.50

The company can issue

$1,000-par-value, 6%

coupon,

14-year

bonds that can be sold for

$1,160

each. Flotation costs would amount to

$25

per bond. Use the estimation formula to figure the approximate after-tax cost of debtfinancing?