Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Hook Industries's capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $2.75 dividend per share (D0 = $2.75). The stock's price is currently $33.75, its dividend is expected to grow at a constant rate of 8% per year, its tax rate is 25%, and its WACC is 14.75%. What percentage of the company's capital structure consists of debt? Do not round intermediate calculations. Round your answer to two decimal places.
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After tax cost of debt is = 8%(1-0.25) = 6%
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