(Individual or component costs of capital?) Compute the costs for the following sources of? financing:
a. A $ 1,000 par value bond with a market price of $ 960 and a coupon interest rate of 7 percent. Flotation costs for a new issue would be approximately 8 percent. The bonds mature in 14 years and the corporate tax rate is 36 percent.
b. A preferred stock selling for $ 106 with an annual dividend payment of $ 7. The flotation cost will be $ 9 per share. The? company's marginal tax rate is 30 percent.
c. Retained earnings totaling $ 4.8 million. The price of the common stock is $ 74 per? share, and dividend per share was $ 8.34 last year. The dividend is not expected to change in the future.
d. New common stock for which the most recent dividend was $ 2.65. The? company's dividends per share should continue to increase at a growth rate of 8 percent into the indefinite future. The market price of the stock is currently $ 51; however, flotation costs of $ 6 per share are expected if the new stock is issued.
a. What is the? firm's after-tax cost of debt on the? bond? ?% (Round to two decimal? places.)
b. What is the cost of capital for the preferred? stock? ?% (Round to two decimal? places.)
c. What is the cost of internal common? equity? ?% (Round to two decimal? places.)
d. What is the cost of external common? equity? ?% (Round to two decimal? places.)