1. The current capital structure of Columbia Gas Company (CG) is 35% debt and 65% equity. This year, CG has an after-tax profit of $5.31 million and is paying $1.6 million in dividends. To finance a transmission pipeline, CG can borrow $2 million at a cost of 10%, the same rate that CG is currently paying on a total of $15 million of long-term debt. CG has 1,000,000 shares outstanding and its current market price is $31. 
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3. If CG's long-term dividend growth rate is expected to be 8%, what is the company's weighted cost of capital? 
4. Assume a marginal tax rate of 40%

Answer rating: 100% (QA)

To calculate the weighted cost of capital WACC for Columbia Gas Company CG we need to consider the c... View the full answer