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Green Foods Inc. has a target capital structure that consists of 3 0 % debt, 5 0 % common equity, and 2 0 % preferred
Green Foods Inc. has a target capital structure that consists of debt, common equity, and preferred stock. The firm has outstanding bonds with a current price of $ years to maturity and a coupon. The firm is subject to a tax rate. Green Firms preferred stock pays a constant dividend of $ per year and is currently trading for a price of $ per share. The firm does not plan to issue new common equity; it will retain earnings instead. Management provides you the following information about their common stock: Green Foods Inc. is a mature firm expected to grow at a constant rate of forever. The firm is expected to pay a dividend of $ at year end and its common stock trades at a price of $ per share. The firms beta is the risk freerate is and the return on the market is Also, the firms stock is risky enough that it commands a premium over the bond yield. Estimate Green Foods weighted average cost of capital.
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