A firm has as its target capital structure 40% equity and 60% bonds. The firm does not
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A firm has as its target capital structure 40% equity and 60% bonds. The firm does not use any preferred stock. The firm paid a dividend this year (D0) of $1.10 and the firm expects dividends to grow at 6% per year. P0 is $11.00. The firm has a bond with a coupon rate of 10% annual interest, five years left to mature, and is currently selling in the market at $1,025. The firm's tax rate is 30%. What is the firm's cost of capital?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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