Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Sun Products Company (SPC) uses only debt and
equity. It can borrow unlimited amounts at an
interest rate of 12% so long as it finances at its target
capital structure, which calls for 45% debt and 55%
common equity. Its last dividend was $2.40, its
expected constant growth rate is 5%, and its stock
sells for $24.
What is SPC's cost of equity?
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Transcribed Image Text:Sun Products Company (SPC) uses only debt and equity. It can borrow unlimited amounts at an interest rate of 12% so long as it finances at its target capital structure, which calls for 45% debt and 55% common equity. Its last dividend was $2.40, its expected constant growth rate is 5%, and its stock sells for $24. What is SPC's cost of equity?
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