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1) ( Cost of equity ) Brille Corporation is issuing new common stock at a market price of $ 27 Dividends last year were $ 1.35 and are expected to...
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​1) (Cost of equity​) Brille Corporation is issuing new common stock

at a market price of ​$ 27 Dividends last year were $ 1.35 and are expected to grow at an annual rate of 7 percent forever. Flotation costs will be 11 percent of market price. What is​ Brille's cost of​ equity?


a) Brille's cost of external common equity is ____%. ​(Round to two decimal​ places.)


2) ​(Cost of preferred stock​) Your firm is planning to issue preferred stock. The stock sells for ​$111 however, if new stock is​ issued, the company would receive only ​$94.35 The par value of the stock is ​$ 100​, and the dividend rate is 12 percent. What is the cost of capital for the stock to your​ firm?


a) The cost of capital for the preferred stock to your firm is ____​%. ​(Round to two decimal​ places.)


3) ​(Individual or component costs of capital​) Compute the costs for the following sources of​ financing:


a. A $1,000 par value bond with a market price of $ 960 and a coupon interest rate of 6 percent. Flotation costs for a new issue would be approximately 6 percent. The bonds mature in 13 years and the corporate tax rate is 38 38 percent. ___% ​(Round to two decimal​ places.)
b. A preferred stock selling for $ 109 with an annual dividend payment of $ 9 The flotation cost will be $5 per share. The​ company's marginal tax rate is 30 percent. ____ ​(Round to two decimal​ places.)


c. Retained earnings totaling $ 4.8 million. The price of the common stock is $ 71 per​ share, and dividend per share was $ 9.21 last year. The dividend is not expected to change in the future. ____ ​(Round to two decimal​ places.)


d. New common stock for which the most recent dividend was $ 3.44 The​ company's dividends per share should continue to increase at a growth rate of 11 percent into the indefinite future. The market price of the stock is currently $ 63 ​however, flotation costs of $ 8 per share are expected if the new stock is issued. ____ ​(Round to two decimal​ places.)

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Subject: Business, Finance

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