Grossnickle Corporation issued 15-year, noncallable, 9.7% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 7.5%. What is the current price of the bonds, given that they now have 14 years to maturity?

a. $1,201.11

b. $1,248.52

c. $1,258.41

d. $1,186.76

e. $1,194.20

Trahan Lumber Company hired you to help estimate its cost of capital. You obtained the following data: D₁ = $1.80; P₀ = $22.50; g = 3.50% (constant); and F = 6.00%. What is the cost of equity raised by selling new common stock?

a. 12.31%

b. 11.05%

c. 12.01%

d. 11.50%

e. 11.72%