The after tax cost of debt is 8%. The required rate of return by stockholders who own Thick stock is 10%. So (D/P + g =

[answerhappygod]

The after tax cost of debt is
8%.
The required rate of return by
stockholders who own Thick stock is 10%. So (D/P + g = 10%) =
$1 and P = $20, and g= 5%
On a per share basis, it costs Thick
$4 a share to float or sell new common stock.
Based on its dividend policy and
projected earnings, Thick projects that it will have $9,000,000 in
retained earnings to finance proposed investments.
Required:
Reminder:
Kd = I (1-tx rate) given in this
problem to be 8%
Kre = D/P + g = 10%
Kcs = D/ P-fc + g = 11.25%
b. Calculate the marginal
cost of capital at $16,000,000.
c. Calculate average cost of capital for a capital budget of
$20,000,000.