Q7

Q8

Question 7 1 pts Blair Brothers' stock currently has a price of $49 per share and is expected to pay a year-end dividend of $2.6 per share (D1 = $2.6). The dividend is expected to grow at a constant rate of 5 percent per year. The company has insufficient retained earnings to fund capital projects and must, therefore, issue new common stock. The new stock has an estimated flotation cost of $4 per share. What is the company's cost of equity capital? 10.78% O 11.28% O 12.28% O 12.78% O 11.78% Question 8 1 pts Klieman Company's perpetual preferred stock sells for $95 per share and pays a $7.4 annual dividend per share. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.6% of the price paid by investors. What is the company's cost of preferred stock? ET 8.17% O 9.67% O 10.17% O 8.67% 09.17%