CHAPTER 9 TL c. Internal common equity when the current market price of LVMH common stock is $45. The expected dividend this coming year should be $3.70, increas- ing thereafter at a 5 percent annual growth rate. LVMH's corporate tax rate is 24 percent. d. LVMH has a preferred stock paying an 8 percent dividend on a $180 par value. If a new issue is offered, flotation costs will be 14 percent of the current price of $190. e. Another LVMH bond selling to yield 14 percent after flotation costs, but before adjusting for the marginal corporate tax rate of 24 percent. In other words, 14 percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows (principal and interest)