Question 1: Ebeling, Inc. has a perpetual preferred stock dividend of 1.65 per quarter and its current stock price 91. What is its component cost of preferred stock?

Question 2: Emphyrio Inc. wishes to issue new stock to finance an aggressive expansion. Lord investment bank charges a flotation cost of 0.11 as a fraction of each stock sold. Emphyros current stock price is 29, and it expects to pay a dividend of 0.73 at the end of the year. What is Emphyrios component cost of a new equity issue?

Question 3: Amiante corporation bonds are currently trading for $980 and make annual payments of $40.The bonds will mature 20 years at which time they will have a face value of $1,000. What is the component cost of Amiante s debt?

Question 4: The US government T-bill has a yield of 0.01, the Wilshire 5000 is expected to yield 0.11, and a stock s beta is 1.4. If inflation is expected to increase by 0.05 next year, but everything else remains the same, what will the new cost of retained earnings be?