QUESTION 7

Eakins Inc.s common stock currently sells for $53.00 per share, the company expects to earn $3.80 per share next year, its expected payout ratio is 70%, and its expected constant growth rate is 7.00%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations.

QUESTION 1

To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 12 years to maturity. This bond has a 6.50% annual coupon, paid semiannually, sells at a price of $955, and has a par value of $1,000. If the firm's tax rate is 30%, what is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations.

Please show work and do both problems , write answer direclty on chegg