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A. Bay Beach Industries wants to maintain their capital structure of 40% debt and 60% equity. The firm's tax rate is 34%. The firm can issue the following securities to finance the investments: Bonds: Mortgage bonds can be issued at a pre-tax cost of 7.5 percent. Debentures can be issued at a pre -tax cost of 7.7 percent . Common EquitySome retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $50. Flotation costs will be $4 per share. The recent common stock dividend was $4.09. Dividends are expected to grow at 5% in the future. What is the cost of capital using mortgage bonds and internal equity?

B. Southern Corporation has a capital structure of 40% debt and 60% common equityThis capital structure is expected not to change. The firm's tax rate is 21%. The firm can issue the following securities to finance capital investments: Debt: Capital can be raised through bank loans at a pretax cost of 8.3% . Also, bonds can be issued at a pretax cost of 6.7%. Common Stock: Retained earnings will be available for investment . In addition, new common stock can be issued at the market price of $ 66. Flotation costs will be $2 per share. The recent common stock dividend was $4.81 . Dividends are expected to grow at 5 % in the future. What is the cost of external equity ? PLEASE INPUT THE ANSWER IN PERCENT ROUNDING IT TO 2 DECIMALS DO NOT INCLUDE % SIGN , E.G. , INSTEAD OF 9.9922 % INPUT 9.99

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