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1. Suppose that a firm has preferred stock that currently trades for $123.45 per share, pays an annual dividend of $6.7, that the dividends do not grow over time, and has a flotation cost of 8.9%. What is the annual, after-flotation cost of the firm's preferred stock?

a. 4.61 %

b. 5.44 %

c. 5.96 %

d. 6.42 %

2. Suppose your firm wishes to finance a project with common stock. The risk free rate is 4%, the market return is 15%, and your firm's beta is equal to 1.65. What is your firm's cost of common stock (k_CS)?

a. 14.85%

b. 15.05%

c. 19.27%

d. 22.15%

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92062821

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