Question
Duster Inc the following capital structure: Debt $ 900,000 Preferred Stock $ 100,000 Common Stock $ 1,000,000 Total Assets = $ 2,000,000 a) Determine the
Duster Inc the following capital structure: Debt $ 900,000 Preferred Stock $ 100,000 Common Stock $ 1,000,000 Total Assets = $ 2,000,000 a) Determine the weight of each capital component. b) If the interest rate on the debt before tax adjustment is 8% and the tax rate is 40% determine the cost of debt. Preferred dividends are $ 2.00 per share and preferred stock market price is $ 25. Determine the cost of preferred stock. c) The common stock dividend is paying $ 3.00 and the price of the common is $ 20 with a growth rate of 5%. Determine the cost of common stock. d) Using the figures you have calculated determine Duster Inc weighted average cost of capital. (WACC)
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