(Solved): DE Inc.'s current (and optimal) capital structure is \( 40 \% \) debt, \( 10 \% \) preferred stock, ...

DE Inc.'s current (and optimal) capital structure is \( 40 \% \) debt, \( 10 \% \) preferred stock, and \( 50 \% \) common equity. CDE is in the \( 40 \% \) tax bracket. The company can issue up to \( \$ 20,000,000 \) in new bonds at par with a \( 7 \% \) coupon rate; any subsequent amount must carry a \( 2 \% \) premium to compensate investors for added risk. A new issue of preferred stock would pay an annual dividend of \( \$ 9 \) and be priced to net the company \( \$ 6 \) per share after the \( \$ 3.00 \) per share floatation cost. The firm has \( \$ 21,000,000 \) in change in retained earnings for the current period. CDE's common stock trades at \( \$ 57 \) per share and the expected dividend on the common stock at \( t \) is 2 . Floatation costs on a new common stock issue is \( \$ 5,00 \) per share. The company is growing at \( 11 \% \) per year. What is the cost of intemal common equity? If the answer is \( 10.45 \% \), enter \( 10.45 \)