Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following
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Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the company’s outstanding bonds is 7.75%, its tax rate is 40%, the next expected dividend is $0.65 a share, the dividend is expected to grow at a constant rate of 6% a year, the price of the stock is $15 per share, the flotation cost for selling new shares is F = 10%, and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?
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Advertising Promotion and Other Aspects of Integrated Marketing Communications
ISBN: 9781111580216
9th edition
Authors: Terence Shimp, Craig Andrews
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