Question: 20. ( 6 points) ABC Corp. has the target capital structure of 20% debt and 80% equity. The company's earnings and dividends are growing at
20. ( 6 points) ABC Corp. has the target capital structure of 20% debt and 80% equity. The company's earnings and dividends are growing at a constant rate of 4%; the last dividend (D0) was $1; and the current stock price is $10. The firm's marginal tax rate is 40%. The flotation cost of stock is 5%. The company expeets $400,000 in retained earnings over the coming year. The before-tax cost of debt is 10%. Draw the MCC schedule
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