1. builtrite is planning on offering a $1000 par value, 20 year, 7% coupon bond with an expected selling price of $1025. Floation cost would be $55 per bond. Preferred stock: builtrite could sell a $46 par value prefered with a 7% coupon for $38 a share. Flotation cost would be $4 ashare. Common stock: currently the stock is selling for $62 a share and has paid a $3.82 dividend. Dividends are expected to continue growing at 12%. Flotation cost would be $3.75 a share and builtire has $350,000 in avalible retained earnings. Assume a 30% tax bracket.
a. Their after tax cost pf internal common retained earnings is?
b. Their after tax cost of new common is?
c. Their after-tax cost of preferred stock is?