Question
Filips Inc. is trying to estimate cost of capital. -Filips believes that the appropriate weight of debt is 35% and the approximate weight of equity
Filips Inc. is trying to estimate cost of capital.
-Filips believes that the appropriate weight of debt is 35% and the approximate weight of equity is 65%
- Filips has a tax rate of 30%
- Filip's bonds currently trade in the market for a price of $835. these $1,000 par value bonds have a coupon rate of 10% (annual coupon payments) and they mature in 28 years.
-Filip's common stock trades for $22 per share. the dividend just paid by Filips was $3.15(D0=3.15) and future dividends are expected to grow at a rate of 4% per year forever.
What is Filips cost of capital?
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