Tanrun Inc. is expected to pay an annual dividend of $0.45 per share in one year. Analysts expect the firm's dividends to grow by 6% forever. Its stock price is $38.7 and its beta is 1.7. The risk-free rate is 2% and the expected market risk premium is 4.5%.

2. What is the best guess for the cost of equity? (3+ Decimals)

Pfizer is expected to pay an annual dividend of $1.85 one year from now. Dividends are expected to grow by 2.5% every year and the current stock price is $247.2. The company is in the process of issuing new common stock, with flotation costs of $1.7 per share.

3. What is the cost of new common stock? (3+ Decimals)

Idaho Engineering Inc. has a target capital structure of 29% debt, 10% preferred stock and 61% common stock. The interest rate on new debt is 4.3% (before taxes), the yield on preferred stock is 8% and the cost of retained earnings is 13%. The firm will not be issuing any new stock, and the tax rate is 35%.

4. What is the company's weighted average cost of capital? (3+ Decimals)