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Growth Company's current share price is $19.95 and it is expected to pay a $1.30 dividend per share next year. After that, the firm's
Growth Company's current share price is $19.95 and it is expected to pay a $1.30 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4.3% per year. a. What is an estimate of Growth Company's cost of equity? The required return (cost of capital) of levered equity is %. (Round to two decimal places b. Growth Company also has preferred stock outstanding that pays a $2.30 per share fixed dividend. If this stock is currently priced at $28.05, what is Growth Company's cost of preferred stock? The cost of capital for preferred stock is %. (Round to two decimal places.) c. Growth Company has existing debt issued three years ago with a coupon rate of 5.9%. The firm just issued new debt at par with a coupon rate of 6.8%. What is Growth Company's cost of debt? The pre-tax cost of debt is d. Growth Company has 5.2 million common shares outstanding and 1.1 million preferred shares outstanding, and its equity has a total book value of $50.2 million. Its liabilities have a market value of $20.5 million. If Growth Company's common and preferred shares are priced as in parts (a) and (b), what is the market value of Growth Company's assets? The market value of assets is $ million. (Round to two decimal places.) e. Growth Company faces a 38% tax rate. Given the information in parts (a) through (d), and your answers to those problems, what is Growth Company's WACC? The weighted average cost of capital is %. (Round to two decimal places.)
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