Medical Associates is a large for-profit group practice. Its dividends are expected to grow at a constant rate of 6% per year into the foreseeable future. The firms last dividend (D0) was $3, and its current stock price is $35. The firms beta coefficient is 1.7; the risk-free rate is currently 11%; and the expected rate of return on the market is 14%. The firms target capital structure calls for 45% debt financing, the interest rate required on the businesss new debt is 10%, and its tax rate is 40%.