Question: Question 7 (10m) You are considering two financing proposals. The first proposal that you are analyzing is a preferred stock that sells for RM100 and

Question 7 (10m) You are considering two financing proposals. The first

Question 7 (10m) You are considering two financing proposals. The first proposal that you are analyzing is a preferred stock that sells for RM100 and pays annual dividend of RM15. The second proposal is a common stock that recently paid a RM6 dividend and the stock is selling for RM50. The rate of growth in earnings for this common stock is 5%. a. Calculate the cost of issuing common stock. b. Calculate the cost of issuing preferred stock. Which financing proposal to be accepted and why? C. (10 m)

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