Capital structure is 40 debt 10 preferred stock and 50


Capital structure is 40% debt, 10% preferred stock, and 50% common equity Common stock currently sells for $27.00 The expected CS dividend is $0.50 Growth rate is 8.00% Flotation cost on CS $1.25 Flotation cost on PS $1.10 Preferred stock sells for $46.00 PS pays a dividend of $5.00 Market yield on bonds is 9.00% Tax rate is 34.00% Calculate the firms cost of new common stock

Select one: A. 9.85% B. 9.94% C. 11.14%

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Financial Management: Capital structure is 40 debt 10 preferred stock and 50
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