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A corporation has 10,000 bonds outstanding with a 6% annual coupon rate and 8 years to maturity. Each bond has a $1,000 face value and
A corporation has 10,000 bonds outstanding with a 6% annual coupon rate and 8 years to maturity. Each bond has a $1,000 face value and a $1,100 market price. The companys 1,250,000 shares of common stock sell for $10 per share. The company will pay $1.2/share in dividend next period, the steady growth of dividend 4%/period is expected to last infinitely. Tax rate is 40%. 1. What is the companys cost of debt? 2. What is the companys cost of equity? 3. What is the companys weight of debt and equity? 4. What is the companys WACC?
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