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Bay Beach Industries wants to maintain their capital structure of 4 0 % debt and 6 0 % equity. The firm's tax rate is 3

Bay Beach Industries wants to maintain their capital structure of 40% debt and 60% equity. The firm's tax rate is 34%. The firm can issue the following securities to
finance the investments:
Bonds: Mortgage bonds can be issued at a pre-tax cost of 11.6 percent. Debentures can be issued at a pre-tax cost of 6 percent.
Common Equity: Some retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $50. Flotation costs
will be $4 per share. The recent common stock dividend was $4.58. Dividends are expected to grow at 6% in the future.
What is the cost of capital using mortgage bonds and internal equity?
Set your calculator to 4 decimal places. PLEASE INPUT THE ANSWER IN PERCENT ROUNDING IT TO 2 DECIMALS. DO NOT INCLUDE % SIGN, E.G., INSTEAD OF
9.9922% INPUT 9.99
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