1. Milton Casinos Inc. has just issued shares of preferred stock for one of its investment in the near future. An annual dividend paid on that preferred stock is $5.10 per share. The preferred stock was sold to the public at a price of $47.00 per share. If the issuance costs are $7.00 per share, what is the cost of the preferred stock issuance for Milton?

a) 12.75%

b) 13.50%

c) 11.80%

d) 11.25%

2. Aston Villa Lodging Co. is currently selling its common stock for $68.00 per share to create new fund for the new investments. Aston Villa pays a current annual dividend of $5.24 per share. The dividends on its common stock issuance will grow at an annual rate of 8.00% per period forever. If there are $4.50 issuance costs per share, what is the cost of external equity for Aston Villa?

a) 17.12%

b) 15.76%

c) 16.91%

d) 18.42%

3. Saleem Hotel Inc. expects to pay a common stock dividend of $2.00 per share next year since the management wants to finance the new capital project. Dividends are expected to grow at a 5.00% constant rate forever. Also, Saleems common stock is currently selling for $20.00 per share and issuance costs are $3.00 per share. Based on the information given, determine Saleems cost of internal equity?

a) 14.00%

b) 13.50%

c) 15.70%

d) 15.00%