1. A partnership has a commercial cleaning service with 35 employees. They are purchasing new vacuum cleaners, floor waxing equipment, and related equipment for $45,000. They estimate the equipment repairs and maintenance of the equipment will be $800/year. Additional supplies will be $300/year. Calculate the annual cost of the equipment using an ROI of 15%.
$15,762
$16,862
$17,400
$18,876
$18,999
2. Trahern Baking Co. common stock sells for $33.15 per share. It expects to earn $2.75 per share during the current year, its expected dividend payout ratio is 60%, and its expected constant dividend growth rate is 5.0%. New stock can be sold to the public at the current price, but a flotation cost of 4.5% would be incurred. What would be the cost of equity from new common stock?
19.57%
21.08%
21.70%
15.78%
14.05%