Addedvalue Corp has 5 million common shares outstanding and 1 million preferred

shares outstanding, and its equity has a total book value of $50 million. The tax rate is

35%. On January 1 2018, the company

's current share price is $20. It has just paid a

$1 dividend p

er share on December 31 2017. The firm's dividends are expected to grow

at a rate of 4% per year thereafter. Addedvalue also has preferred stock outstanding

that pays a $2 per share fixed dividend and is currently priced at $28. The firm has

20,000 existing bonds issued three years ago with an annual coupon rate of 6% maturing

at the beginning