You have just been hired to compute the cost of capital for debt, preferred stock, and common stock for the Middle Corporation.

a. Cost of debt Since Mindflex's bonds do not trade very frequently, you have decided to use 9.38% as your cost of debt, which is the yield to maturity on a portfolio of bonds with a similar credit rating and maturity as Mindflex's outstanding debt. In addition, Mindflex faces a corporate tax rate of 34%.

The cost of capital from this bond debt is? (Round to two decimal places.)

b. Cost of common equity: Mindflex's common stock paid a $1.22 dividend last year. In addition, Mindflex's dividends are growing at a rate of 6.1% per year and this growth rate is expected to continue into the foreseeable future. The price of this stock is currently $30.77.

The cost of capital from the common equity is?. (Round to two decimal places.)

c. Cost of debt Now let's assume that Mindflex's bonds are frequently traded. A Mindflex bond has a 1,000 par value (face value) and a coupon interest rate of 13.1%. The bonds are currently selling for 1,129 and will mature in 20 years. Mindflex's corporate tax rate is 34%.

The cost of capital from this bond debt is? (Round to two decimal places.)

d. Cost of preferred stock Mindflex's preferred stock pays a 7.4% dividend on a $123 par value. However, the market price at which the preferred shares could be sold is only $90.79.

The cost of the preferred stock is? (Round to two decimal places.)