What is the cost of Common Stock for Foggy Futures Weather Forecasters? The firm is...

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Accounting

What is the cost of Common Stock for Foggy Futures Weather Forecasters? The firm is in the 40% tax bracket. The optimal capital structure is listed below:
The firm's common stock is currently selling for $65 per share. The firm expects to pay cash dividends of $7 per share next year. The dividends have been growing at 5%. The flotation costs amounted to $5 per share.
(NB: Use the intrinsic (internal) values (rates, cost) of each component in the capital structure.)
Question 5Answer
a.
13.26%
b.
15.77%
c.
17.25%
d.
16.67%

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