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Mr. B. plans to calculate his cost of capital, based on the data below: Debt: the company accrues $ 750 in bank debt, 5
Mr. B. plans to calculate his cost of capital, based on the data below: Debt: the company accrues $ 750 in bank debt, 5 year term, 12% interest. Tax rate 25% Preffered Stock: The company can sell 4% of the dividend preferred stock for a face value of $ 90. Price preferred stock $ 75, flotation cost $ 1 Common Stock: The company's common stock when it sells for $50 per share, next year's dividend estimated to be paid $ 3 per share. The company's dividend has grown at a rate of 3% and is expected to grow at that rate for good. Common stock issued with a discount of $ 1 and a flotation cost of $ 1.5. Based on book value, proportion of long-term debt 30%, preferred stock 20%, common stock 50% then count: a. Individual fees for funding b. Weighted average capital of the Company
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