ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with ten years to maturity that is quoted at 111.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 8.8 percent annually.

Requirement 1:

What is ICUs pretax cost of debt? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

Pretax cost of debt

%

Requirement 2:

If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

Aftertax cost of debt

%

Sixth Fourth Bank has an issue of preferred stock with a $5.70 stated dividend that just sold for $99 per share.

Required:

What is the banks cost of preferred stock? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

Cost of preferred stock

%

The Lo Tech Co. just issued a dividend of $2.40 per share on its common stock. The company is expected to maintain a constant 8 percent growth rate in its dividends indefinitely.

Required:

If the stock sells for $44.20 a share, what is the companys cost of equity? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

Cost of equity

%