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Cost of capital Edna Recording Studios, Inc., reported earnings available to common stock of $4,600,000 last year. From those earnings, the company paid a dividend of $1.25 on each of its 1,000,000 common shares outstanding. The capital structure of the company includes 25% debt, 10% preferred stock, and 65% common stock. It is taxed at a rate of 24%. a. If the market price of the common stock is $30 and dividends are expected to grow at a rate of 5% per year for the foreseeable future, what is the company's cost of retained earnings financing? b. If underpricing and flotation costs on new shares of common stock amount to $6 per share, what is the company's cost of new common stock financing? C. The company can issue $1.91 dividend preferred stock for a market price of $30 per share. Flotation costs would amount to $5 per share. What is the cost of preferred stock financing? d. The company can issue $1,000-par-value, 10% coupon, 10-year bonds that can be sold for $1,120 each. Flotation costs would amount to $20 per bond. Use the estimation formula to figure the approximate after-tax cost of debt financing? a. If the market price of the common stock is $30 and dividends are expected to grow at a rate of 5% per year for the foreseeable future, the company's cost of retained earnings financing is %. (Round to two decimal places.)

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