nstant rate of 6% per year. The price of Sentry Manufacturing's stock today is $32 pe entry Manufacturing decides to issue new common stock, flotation costs will 1. Sentry Manufacturing just paid a dividend $5 per share. The dividend is expected to grow wh. per share. Sentry Manufacturing's marginal tax rate is 35%. Based on the above the cost of new common stock (external equity) is A) 23.72%. B) 24,52% C) 2409% D) 25.26%. Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing new 15 year, $1,000 par, 10% semi-annual coupon bonds. The market price of the 2 is $1,090 each. Crandal's flotation expense on the new bonds will be $40 per bond randal's marginal tax rate is 25%. What isthe After-Tas cost of debt for the newly-issued bonds? A)6.68% B) 7.03% C)721 % D)7.54 % 3. Since there is no effect of flotation cost when firms use retained earnings to finance their operations, the cost of retained earnings (internal equity) should be equal to investors' req uired rate of return on equity A) TRUE B) FALSE A company has preferred stock that can be sold for $21 per share. The preferred stock pays an annual dividend of $3.5 per share. Flotation costs associated with the sale of preferred stock equal $1.75 per share. The company's marginal tax rate is 35%. Therefore, the cost of preferred stock is 4. A) 18.87%. B) 17.72%. C) 18.26%. D) 18.18%. Feast Inc. plans to maintain its optimal capital structure of 40% debt, 10% preferred stock. and 50% common equity indefinitely. The pre-tax required return on each component source of capital is as follows: debt 8%; preferred stock 12%; common equity -16%. Assuming a 40% marginal tax rate, what after-tax weighted average cost of capital can we infer for the firm? A) 11.64% B) 11.27% C) 11.12% Page 2 of 8