Problem:
Please help with the following problems.
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 50 cents.
Jury's dividend growth rate is 8%, and flotation cost is $1.25. Preferred stock sells for $46, and pays a dividend of $5, and carries a flotation cost of $1.10. Jury Company bonds yield 9% in the market. Jury is in the 34% tax bracket.
Calculate cost of debt, cost of common stock, cost of new common stock, cost of preferred stock and cost of retained earnings.
Cost of retained earnings is the same as the cos t of commons stock Ke.