Problem
Jury Company wants to calculate the component costs in its capital structure. Common stock currently sells for $27, and is expected to pay a dividend of $0.50. Jurys dividend growth rate is 8%, and flotation cost is $1.25. Preferred stock sells for $46, pays a dividend of $4.00, and carries a flotation cost of $1.10. Jury Company bonds yield 9% in the market. Jury is in the 40% tax bracket. Calculate after tax cost of common stock.