Question
How do you do part c? a)GHI Company's current share price is $17.65 and it is expected to pay a $0.7 dividend per share next
How do you do part c?
a)GHI Company's current share price is $17.65 and it is expected to pay a $0.7 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 5.8% per year.
What is an estimate of GHI Company's cost of equity? - solved: 9.77%
b)GHI Company also has preferred stock outstanding that pays a $1.9 per share fixed dividend. If this stock is currently priced at $30.65 per share, what is GHI Company's cost of preferred stock?- solved: 6.2%
c)GHI Company has existing debt issued three years ago with a coupon rate of 6%. The firm just issued new debt at par with a coupon rate of 6%. What is GHI Company's pre-tax cost of debt?
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