$($Individual or component costs of capital$)$ Compute the cost of the$$ following:

a$.$ A bond that has $$$$1,000$ par value$($face value$)$ and a contract or coupon interest rate of $12$ percent. A new issue would have a floatation cost of $7$ percent of the $$$$1,115$ market value. The bonds mature in $8$ years. The$$ firm's average tax rate is $30$ percent and its marginal tax rate is $22$ percent.

b$.$ A new common stock issue that paid a $$$$1\mathrm{.}20$ dividend last year. The par value of the stock is$$ $$15,$ and earnings per share have grown at a rate of $8$ percent per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant$$ dividend$-$earnings ratio of $30$ percent. The price of this stock is now $$$$28,$ but $8$ percent flotation costs are anticipated.

c$.$ Internal common equity when the current market price of the common stock is $$$$51.$ The expected dividend this coming year should be $$$$3\mathrm{.}20,$ increasing thereafter at an annual growth rate of $7$ percent. The$$ corporation's tax rate is $22$ percent.

d$.$ A preferred stock paying a dividend of $9$ percent on a $$$$120$ par value. If a new issue is$$ offered, flotation costs will be $11$ percent of the current price of $$$$167.$

e$.$ A bond selling to yield $15$ percent after flotation$$ costs, but before adjusting for the marginal corporate tax rate of $22$ percent. In other$$ words, $15$ percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows$($principal and$$ interest$).$