Assume that bonds ( B) (in Question 5) is RM3 million and stock ( S) is RM7
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Question:
Assume that bonds (B) (in Question 5) is RM3 million and stock (S) is RM7 million. The bonds have a 14% yield to maturity, and the stock is expected to pay RM500,000 in dividends this year. The growth rate of dividends has been 11% and is expected to continue at the same rate. Find the cost of capital if the corporation tax rate on income is 40%.
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