Question 3 (2 points) Costly Corporation is considering a new preferred stock issue. The preferred would have a par value of $500 with an annual dividend equal to 13.0% of par. The company believes that the market value of the stock would be $945.00 per share with flotation costs of $76.00 per share. The firm's marginal tax rate is 40%. What is the firm's cost of preferred stock? 5.81% 6.88% 8.22% 6.40% 7.48% Question 4 (2 points) Costly Corporation is considering using equity financing. Currently, the firm's stock is selling for $66.00 per share. The firm's dividend for next year is expected to be $5.50 with an annual growth rate of 4.0% thereafter indefinitely. If the firm issues new stock, the flotation costs would equal 11.0% of the stock's market value. The firm's marginal tax rate is 40%. What is the firm's cost of internal equity? 11.63% 13.36% 12.67% 13.74% 12.33%