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To estimate the cost of capital of Supreme Electric Autos Inc. ( NYSE: SEA ) , you collected the following information. SEAs tax rate is

To estimate the cost of capital of Supreme Electric Autos Inc. (NYSE: SEA), you collected the following information. SEAs tax rate is 25% SEA paid a dividend of $2.00 per share last year (D0) and its stock currently sells at a price of $26.00 per share. You expect SEAs earnings and dividends to grow at a constant rate of 4% in the future. Ten-year Treasury bonds yield 3%, the market risk premium is 6%, and SEAs beta is 1.5. New debt could be sold at par with a coupon rate of 8%. The new debt has a face value of $1,000 and will mature in 15 years. Interest is paid semiannually. Flotation costs are negligible and can be ignored in the cost of debt estimation. New preferred stock could be sold to the public at a price of $100 per share, with a dividend of $8.16. The flotation cost for new preferred stock issuance is $4.00 per share. New common equity can be raised either by retaining earnings or by issuing new common stock. The flotation cost for new common stock issuance is 8%.4. What is SEAs after-tax cost of debt?5. What is SEA's cost of preferred stock considering flotation costs?6. What is SEA's cost of internal equity using the capital asset pricing model (CAPM) approach?7. What is SEA's cost of internal equity using the discounted cash flow (DCF) approach ignoring flotation costs? 8. What is SEA's cost of internal equity by the Bond-Yield-Plus-Risk-Premium method using the judgmental risk premium of 4.0%?9. What is SEA's cost of external equity using the discounted cash flow (DCF) approach considering flotation costs?

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