1. XP Ltd is planning to issue preference shares at an offer price of $217 per share. They expect to pay a dividend of $15.50 annually. Issue costs are estimated at 6.30% of the offer price. The corporate tax rate for XP Ltd is 20%. Calculate the before-tax and after-tax cost of preference shares for XP Ltd.

2. RNZ Ltd has its ordinary shares that are currently being traded at $10.50. A dividend of $2.70 was recently paid and the next dividend is due a year from now. Dividend is expected to grow at 8% per annum. Assuming a corporate tax rate of 35% and that RNZ Ltd pays fully franked dividends, calculate the before-tax cost and after-tax cost of retained earnings.

3. The current trading price for shares of Prezzy Ltd is $5.35. Prezzy Ltd would issue a new share in the market for $5.40. Floatation costs are expected to be 5% of the proceeds of the issue. The last dividend was $0.70 and the next dividend is due a year from now. Prezzy Ltd pays fully franked dividends and the corporate tax rate is 24%. The estimated growth rate of divided is 6% per annum. Calculate the before-tax and after-tax cost of a new issue of ordinary shares.

4. Ryl Ltd has an equity risk premium of 4%. It has a beta () of 0.56 and the risk-free rate of 7%. Using the CAPM estimate the after-tax cost of Ryl Ltd.s ordinary shares.