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Dell Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 9%,
Dell Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. Its before-tax cost of debt is 9%, and its marginal tax rate is 25%. The current stock price is Po = $32.00 The last dividend was Do = $1.25, and its expected to grow at a 5% constant rate. Calculate the cost of equity using the discounted cash flow method and then use that number to find the WACC for Dell.
7.17% 7.35% 7.79% 8.04% 8.23%
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