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Vosberg, Inc wants to calculate the component costs in its capital structure. Common stock currently sells for $33, and is expected to pay a dividend of $.40. Vosberg's dividend growth rate is 8%, and flotation cost is $1.25. Preferred stock sells for $40, pays a dividend of $3.00, and carries a flotation cost of $1.10. Vosberg’s bonds yield 7% in the market. Vosberg is in the 30% tax bracket.

Calculate cost of debt, cost of new common stock, cost of preferred stock and cost of retained earnings.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91382277

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