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Emma Company has 600,000 shares of common stock outstanding at a market price of $42 a share. Last month, the company paid an annual dividend
Emma Company has 600,000 shares of common stock outstanding at a market price of $42 a share. Last month, the company paid an annual dividend in the amount of $1.5 per share. The dividend growth rate is 5%. Emma Company also has 10,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 5.5% coupon, pay interest annually, and mature in 10 years. The bonds are selling at 102% of face value. The company's tax rate is 34%. What is Emma Company's weighted average cost of capital?
6.60% | ||
6.81% | ||
7.03% | ||
7.22% | ||
7.41% |
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