A firm has a WACC of 12%. It is financed with 40% debt and 60% equity. The

Question:

A firm has a WACC of 12%. It is financed with 40% debt and 60% equity. The firm’s cost of debt is 10% and its tax rate is 40%. If the firm’s dividend growth rate is 8% and its current stock price is $40, what is the value of the next dividend the firm is expected to pay?

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...