1) IBM expects to pay a dividend of $ 5 next year and expects these dividends to grow at 66% a year. The price of IBM is $80 per share. What is IBM's cost of equity capital?
2) Preferred stock of Ford Motors pays a dividend of $3 each year and trades at a price of $35. What is the cost of preferred stock capital for Ford?
3) Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 15% weight in equity, 15% in preferred stock, and 70% in debt. The cost of equity capital is 12%. the cost of preferred stock is 99%, and the pretax cost of debt is 88%. What is the weighted average cost of capital for Ford if its marginal tax rate is 40%?