Question $16(4$ points$)$

Costly Corporation plans a new issue of bonds with a par value of $$1000,$ a maturity of $30$ years, and an annual coupon rate of $13\mathrm{.}0\%.$ Flotation costs associated with a new debt issue would equal $8\mathrm{.}0\%$ of the market value of the bonds. Currently, the appropriate discount rate for bonds of firms similar to Costly is $17\mathrm{.}0\%.$ The firm's marginal tax rate is $30\%.$ What will the firm's true cost of debt be for this new bond issue?

$$

$14\mathrm{.}17\%$

$9\mathrm{.}92\%$

$20\mathrm{.}75\%$

Question $17(4$ points$)$

Costly Corporation is considering using equity financing. Currently, the firm's stock is