Example #3 NSU Unlimited, Inc. can sell bonds with a par value of $1,000 and a coupon rate of 8% per year, a paid semi-annually. The bonds will have a maturity of 5 years. The current market price of similar bonds is $975. NSU Unlimited anticipates flotation costs of $20 per bond. NSU Unlimited, Inc. can sell preferred stock with the following characteristics: $100 par value, 5% annual dividend. The stock is currently selling for a price of $87.50 per share. NSU Unlimited anticipates flotation costs of $3 per share. a NSU Unlimited, Inc. can sell common stock at a price is $150 per share. The stock last paid a semi-annual dividend of Do = $2.50 per share. The dividend is expected to grow at an annual rate of 8% for the foreseeable future (i.e., for a really long time). NSU Unlimited anticipates flotation costs of 10%. The company's tax rate is 40%. 2020 Balance Sheet (thousands of dollars) cash accounts receivable inventory current assets gross fixed assets accum. depreciation net fixed assets total assets 102 400 438 940 2391 550 1841 2781 accounts payable notes payable accruals current liabilities long-term debt (bonds) preferred stock common stock paid-in capital retained earnings total common equity total liabilities and equity 325 300 110 735 526 125 128 584 683 1395 2781