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Jury Company wants to calculate the component costs in its capital structure. Common stock currently sells for $27 and is expected to pay a dividend
Jury Company wants to calculate the component costs in its capital structure. Common stock currently sells for $27 and is expected to pay a dividend of $0.50. Jury's dividend growth rate is 8%, and flotation cost is $1.25. Preferred stock sells for $46, pays a dividend of $4.00, and carries a flotation cost of $1.10. Jury Company bonds yield 9% in the market. Jury is in the 40% tax bracket. Calculate after tax cost of debt, after tax cost of common stock, and after tax cost of preferred stock.
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