Jury Company Wants to Calculate the Component Costs in Its

question 134

Essay

Jury Company wants to calculate the component costs in its capital structure. Common stock currently sells for $27, and is expected to pay a dividend of $0.50. Jury's dividend growth rate is 8%, and flotation cost is $1.25. Preferred stock sells for $46, pays a dividend of $4.00, and carries a flotation cost of $1.10. Jury Company bonds yield 9% in the market. Jury is in the 40% tax bracket.
Calculate cost of debt, cost of common stock, cost of new common stock, cost of preferred stock and cost of retained earnings.
Cost of Debt (after tax)

---

Definitions:

Restricted Communication

Limitations placed on the exchange of information, often to preserve confidentiality or for the purpose of control within organizations.

Maintenance Activity

Maintenance Activity involves tasks and operations carried out to keep machinery, equipment, or systems operating efficiently and preventing breakdowns or failures.

Centralized Communication

A communication structure where all decisions and messages are passed through a central point or person within an organization.

Brainstorming

A technique for generating a large number of ideas or solutions to a problem in a short period, typically through a group discussion.