pls refer to image attachedpls show formula and solution not in spreadsheet form. Use the following information for the next two questions:Currently, Gamora Corporation has a capital structure that consists of 50% equity and 50% debt. The company's long-term bondshave a before-tax yield to maturity of 8%. The company uses the DCF approach to determine the cost of equity. Gamora's commonstock currently trades at P115 per share. The year-end dividend (D1) is expected to be P6.50 per share, and the dividend is expected togrow forever at a constant rate of 6% a year. The company estimates that it will have to issue new common stock to help fund thisyear's projects. The flotation cost on new common stock issued is 15%, and the company's tax rate is 30%.What is the company's current weighted average cost of capital (WACC)?

Given, Cost of debt = 8% Weight of debt = 50% Weight of equity = 50% Tax rate = 30% Year end…

Answered: Currently, Gamora Corporation has a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 15P

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