Question
1. Expected Dividend for next year $4.25 Growth rate of dividends 4% Current stock price $56.25 Bond information Coupon rate = 8%, maturity = 10
1.
| Expected Dividend for next year | $4.25 |
| Growth rate of dividends | 4% |
| Current stock price | $56.25 |
| Bond information | Coupon rate = 8%, maturity = 10 years, maturity value =$1,000 and the current price is 1,082.25. Assume interest is paid semiannually. |
| Debt to equity ratio | 0.25 |
| Flotation cost of debt | 1.75% |
| Flotation cost of equity | 5.5% |
| Tax rate | 22% |
Compute the cost of capital.
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Millionaire By Thirty The Quickest Path To Early Financial Independence
Authors: Douglas R. Andrew, Emron Andrew, Aaron Andrew
1st Edition
0446501840, 978-0446501842
