What is the cost of Common Stock for Foggy Futures Weather Forecasters? The firm is in the $40\%$ tax bracket. The optimal capital structure is listed below:

The firm's common stock is currently selling for $$65$ per share. The firm expects to pay cash dividends of $$7$ per share next year. The dividends have been growing at $5\%.$ The flotation costs amounted to $$5$ per share.

$($NB: Use the intrinsic $($internal$)$ values $($rates$,$ cost$)$ of each component in the capital structure.$)$

Question $5$Answer

a$.$

$13\mathrm{.}26\%$

b$.$

$15\mathrm{.}77\%$

c$.$

$17\mathrm{.}25\%$

d$.$

$16\mathrm{.}67\%$