Please answer both questions thank you!

Question 1

A firm issued $15 million in preferred stock at a price of $3.25 per share. The preferred shares carry a 13% dividend, or $0.42 annually. After paying fees and costs, the firm realizes $2.89 per share issued. What is the cost of capital for this issuance of preferred stock?

36%

1.12%

8.5%

14.6%

Question 2

A stock paid $2.25 in dividends at the end of last year and is expected to pay a cash dividend until infinity. No growth is expected. Investors require a 5.5% rate of return. What is the value of the common stock?

		2.25
		3.75
		37.5
		39.75