Please show step by step how to solve the problem.

Answer: 12.72

1.) The firm's stock price is $36.12.

The dividend to be paid this year is $3.29.

Historically, the dividends have grown 3% per year.

The flotation and commission cost are $1.24.

What is the cost of issuing new equity?

Post your answer to 1 decimal place.

rate or cost = (Div1)/net Price) + g

Thank you.

Please show step by step how to solve the problem.

Answer: 13.97

2.) Blue Mamba bed and breakfast uses equity and debt in their capital structure (no preferred). They target 55% as their preferred debt percentage.

Their marginal tax rate is 26% and their before tax cost of debt is 3.8%.

Their beta is 3.0.

The 3 month treasury rate is 0.3% and the S&P 500 return is expected to be be 9.4%.

What is Black Mamba's weighted average cost of capital (WACC)?

Post your result to two decimal places.

To calculate the WACC you need the after-tax cost of debt, % of debt , cost of equity , % of equity.

1. After tax cost of debt = cost of debt *(1-marginal tax rate)

2. % of debt is given

3. cost of equity can be calculated using the CAPM, Rs = RF + [* (Rm RF)]

RF = treasury rate

B= beta is given

Rm= market return is proxied by the S&P 500 return

4. % of equity = 100-% of debt.

WACC = % of debt * after tax cost of debt + % of equity * return expected on the firm

Thank you.

Please show step by step how to solve the problem.

Answer:8.95

3.) If the tax rate is 26% and the cost of debt is 12.1%, what is the after tax cost of debt?

Post your answer with 2 decimal places.

cost of debt * (1- marginal tax rate)

Before Tax Cost * ( 1 - ISTR)

Thank you.