Bex Limited just paid a dividend of $0.50, and dividends are expected to grow at a constant
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Bex Limited just paid a dividend of $0.50, and dividends are expected to grow at a constant rate of 6.5% per year. The ordinary shares currently sell for $18.00 a share, but to sell a new issue, floatation costs of $1.00 per share would be incurred. The before-tax cost of debt is 7.8%, and the tax rate is 40%. The target capital structure consists of 30% debt and 70% ordinary share equity. What is the company's after-tax WACC if all equity is from selling new ordinary shares?
Expert Answer:
1 Calculate the Cost of Equity Re Bex Limiteds dividends are expected to grow at a constant rate of ... View the full answer
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