# IMG 20230121 085104 869.jpg - Call 37 KB/s 7:04 PM 22%...

• Assignment
• 1

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 out of 1 page.

End of preview. Want to read the entire page?

Course Hero member to access this document

Term
Spring
Professor
N/A
Tags
Debt, Edna Recording Studios

Unformatted text preview: Call < 37 KB/s 7:04 PM @ 22% X Edna Recording Studios,... . .. chegg.com yajnapid answered this Was this answer helpful? 19 3,341 answers Solution: a Cost of Retained Earnings(Ke) = [Dividend (1+growth)/Market price] + growth Cost of Retained Earnings =[126 (1+0.06)/40]+ 0.06 =0.09339 =9.339% =9.34% b. Company Cost of New Common Stock (Ks)=[Dividend (1+growth)/(Market price - floatation costs ] + growth Rate =[1.26 (1+0.06)/(40-7)]+0.06 =0.10047 =10.047% =10% Cost of Preferred Stock Kp=Prefered Dividend/(market price - Flotation cost) =2/(25-3) =0.090909 =9.09% cost of debt financing Kd= [(Coupon +(FV-RV)/T)/(FV+RV)/2] x [1 - 0.40] =[(100+(1000-1175)/5)/(1000+1175)/2] x [1-0.40] =[65/1087.5] x 0.60 O...
View Full Document