1) Given the following information, calculate the weighted average cost for the Han Corp. Percent of capital structure: Preferred stock 15% Common equity 60% Debt 25% Additional information: Corporate tax rate 34%, (Dividend, preferred $9.50) , Dividend, expected common $1.50, price preferred $100.00 Growth rate 9% Bond yield 6% Price, common $75.00.
2) Suppose Pat, Ltd. just issued a dividend of $2.40 per share on its common stock. The company's dividends have been growing at a rate of 5%. If the stock currently sells for $80.00, what is your best estimate of the company's cost of equity?