1. The current dividend for a corporation is $3.73. The dividend is expected to increase by 12%. and it is expected to continue that rate of growth for the foreseeable future. Given their stock is trading at $38 per share and it cost $3.37 per share to issue new common stock, what is the cost of new common equity capital?
A 10.99%
B. 22.77%
C. 24.06%
D. 10.77%
2. A firm issued $10 million in preferred stock at a price of $60.35 per share. The preferred shares carry an 11% dividend. The firm pays $2.87 per share in flotation costs per share. What is the cost of capital for this issuance of preferred stock?
A. 11.54%
B. 2.31%
C. 43.23%
D. 16.01%