Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $8.00. You believe that dividends will grow at a rate of 15.0% per year for two years, and then at a rate of 9.0% per year thereafter. You expect the stock will sell for $82.37 in two years. You expect an annual rate of return of 16.0% on this investment. If you plan to hold the stock indefinitely, what is the most you would pay for the stock now?

Question 23 options:

	$77.01
	$121.34
	$138.23
	$102.47
	$149.64

Costly Corporation plans a new issue of bonds with a par value of $1000, a maturity of 31 years, and an annual coupon rate of 8.0%. Flotation costs associated with a new debt issue would equal 4.0% of the market value of the bonds. Currently, the appropriate discount rate for bonds of firms similar to Costly is 7.0%. The firm's marginal tax rate is 50%. What will the firm's true cost of debt be for this new bond issue?

Question 24 options:

	7.34%
	3.67%
	8.36%
	4.18%
	9.39%

Costly Corporation is considering using equity financing. Currently, the firm's stock is selling for $60.00 per share. The firm's dividend for next year is expected to be $5.30 with an annual growth rate of 6.0% thereafter indefinitely. If the firm issues new stock, the flotation costs would equal 15.0% of the stock's market value. The firm's marginal tax rate is 40%. What is the firm's cost of external equity?

Question 25 options:

	17.02%
	14.83%
	15.36%
	16.39%
	15.45%

Marginal Incorporated (MI) has determined that its before-tax cost of debt is 7.0%. Its cost of preferred stock is 11.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 19.0%. Currently, the firm's capital structure has $250 million of debt, $55 million of preferred stock, and $195 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $64 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 $136 million?

Question 26 options:

	10.95%
	11.25%
	10.66%
	12.12%
	10.08%