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AromaPlus, an essential oil company, plans to start a new project and will finance the project with 40 debts and the rest in common stocks.
AromaPlus, an essential oil company, plans to start a new project and will finance the project with 40 debts and the rest in common stocks. The company will issuc a 10-ycar, 5% coupon bond that can scil for $925.61. The company's stack is currently selling for $48 a share. It is paying $1.8 in dividends and the dividend has been growing at 8% a year and is expected to remain the same. The company's stock has a beta of 1.3 and the market rate of return is 11.3%, with a risk-free rate of 2.5%. What is the company's cost of debts and common equities \{stacks
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