Assuming that the debt amount is $3 million, the preferred stock amount is $2 million and the equity amount is 55 million. The expected dividend payment of the company's common stock will be $3, the growth rate (continue forever) is 5% and the current market price is $60. In addition to this, the Par Bond has $1.000 facevalue and provides an 10% annual coupon, and the preferred stock of the company has $1.000 facevalue, the dividend rate is 8% and its current market price is $800. Find the cost of capital ( WACC) if the corporation tax rate is 40%.

Assuming that the debt amount is $3 million, the preferred stock amount is $2 million and the equity amount is 55 million. The expected dividend payment of the company's common stock will be $3, the growth rate (continue forever) is 5% and the current market price is $60. In addition to this, the Par Bond has $1.000 facevalue and provides an 10% annual coupon, and the preferred stock of the company has $1.000 facevalue, the dividend rate is 8% and its current market price is $800. Find the cost of capital ( WACC) if the corporation tax rate is 40%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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