1. What is the firms cost of equity?

2. Suppose the firm incurs an issuing (or floatation) cost equal to 15% of price when they issue new stock. What is the firms cost of equity under these conditions?

3. What is the firms after-tax cost of debt?

4. What is the firms capital structure (in book value terms)?

5. What is the firms capital structure (in market value terms)?

The balance sheet for AZS Corp. for the year ending 2020 is given below. All numbers are in millions of dollars. Assets Liabilities and owner's equity Current assets $18 million Current liabilities $10 million Gross fixed assets $100 million Long-term debt (Bonds) $20 million Net fixed assets $82 million Equity Total assets $100 million Common stock ($0.50 par) Paid-in capital Retained earnings $20 million $20 million $30 million Total equity $70 million Total liabilities plus owner's equity $100 million The firm's common stock is trading at $10 per share and the bonds are trading at $890.84 each. The stock paid a dividend of $0.50 per share today and dividends are expected to increase at 5% per annum into the future. The bonds were issued 2 years ago, had an original life of 20 years and carry a 5% coupon that is paid semi-annually. The tax rate is 20%