Crypton Electronics has a capital structure consisting of

39

percent common stock and

61

percent debt. A debt issue of

$1,000

par value,

6.4

percent bonds that mature in

15

years and pay annual interest will sell for

$973.

Common stock of the firm is currently selling for

$29.24

per share and the firm expects to pay a

$2.34

dividend next year. Dividends have grown at the rate of

5.5

percent per year and are expected to continue to do so for the foreseeable future. What is Crypton's cost of capital where the firm's tax rate is

30

percent?