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4. Cost of capital (WACC) Your task is to find the cost of capital (WACC) for a company. The company has two sources of capital
4. Cost of capital (WACC) Your task is to find the cost of capital (WACC) for a company. The company has two sources of capital available. The marginal tax rate for the company is 35%. Debt: 400 discount (e.g. zero coupon) bonds with $10 000 par value and 5 years to maturity. Bonds currently offer 3% yield to bondholders. Common stock: 125 000 shares outstanding with the accounting book value of $30 but the company w recently able to issue new stock with the price of $45. The company paid recently out $2 as dividends a expects dividends to grow by 3% annually within foreseen future. a) b) Provide an explanation about what your result means? Find the cost of capital (WACC) for the company
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