Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at 11% and its common stock currently pays a P2 dividend per share. The stock's price is currently P24.75 and its dividend is expected to grow at a rate of 7% per year. Its tax rate is 35% and its WACC is 13.95%. What percentage of the company's capital structure consists of debt?

Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at 11% and its common stock currently pays a P2 dividend per share. The stock's price is currently P24.75 and its dividend is expected to grow at a rate of 7% per year. Its tax rate is 35% and its WACC is 13.95%. What percentage of the company's capital structure consists of debt?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 7P

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