Question
Crypton Electronics has a capital structure consisting of 40% common stock and 60% debt. A debt issue of $1,000 par value, 6.4% bonds that mature
Crypton Electronics has a capital structure consisting of 40% common stock and 60% debt. A debt issue of $1,000 par value, 6.4% bonds that mature in 15 years and pay annual interest will sell for $978. Common stock of the firm is currently selling for $30.38 per share and the firm expects to pay a $2.21 dividend next year. Dividends have grown at the rate of 5.1% 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%? (ROUND TO THREE DECIMAL PLACES) Crypton's cost of capital is _______%
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