Use the information to answer the following questions.

The Global Advertising Company has a marginal tax rate of 40%.

The company can raise debt at 8% interest rate.

The last dividend paid by Global was $3. Global's common stock is selling for $40 per share, and its expected growth rate in earnings and dividends is 6%.

Global plans to finance all capital expenditures with 80% debt and 20% equity.

What is the firm's weighted average cost of capital if the firm has sufficient retained earnings to fund the equity portion of its capital budget?

Select one:

a.15.70%

b.11.12%

c.13.91%

d.6.63%

e.9.37%

Continued from previous question. Assume that the floatation cost of new stock issuing is 5%. What is Global's cost of common stock if it has to issue new common stock?

Select one:

a.18.96%

b.16.23%

c.20.00%

d.14.37%

e.17.61%