1. The coupon rate on a debt issue is 7%. If the yield to maturity on the debt is 8%, what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 41%? (Round your answer to 2 decimal places.)

3.37%

6.07%

4.72%

6.87%

2. Expected cash dividends are $3.00, the dividend yield is 8%, flotation costs are 3% of price, and the growth rate is 3%. Compute cost of new common stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

11.00%

12.25%

13.35%

11.25%

3. A firm's stock is selling for $87. The next annual dividend is expected to be $2.00. The growth rate is 5%. The flotation cost is $3. What is the cost of retained earnings? (Round your answer to 2 decimal places.)

5.95%

8.75%

7.30%

5.15%