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ONLY NEED THE ANSWER TO QUESTION E) growth companies WACC Growth Company's current share price is $20.00, and it is expected to pay a $1.20
ONLY NEED THE ANSWER TO QUESTION E) growth companies WACC
Growth Company's current share price is $20.00, and it is expected to pay a $1.20 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 3.6% per year. a. What is an estimate of Growth Company's cost of equity? b. Growth Company also has preferred stock outstanding that pays a $2.10 per share fixed dividend. If this stock is currently priced at $27.95, what is Growth Company's cost of preferred stock? c. Growth Company has existing debt issued three years ago with a coupon rate of 6.5%. The firm just issued new debt at par with a coupon rate of 6.9%. What is Growth Company's cost of debt? d. Growth Company has 4.6 million common shares outstanding and 1.2 million preferred shares outstanding, and its equity has a total book value of $50.2 million. Its liabilities have a market value of $20.2 million. If Growth Company's common and preferred shares are priced at $20.00 and $27.95, respectively, what is the market value of Growth Company's assets? e. Growth Company faces a 40% tax rate. Given the information in parts a through d and your answers to those problems, what is Growth Company's WACC? Note- Assume that the firm will alwavs he able to utilize its full interest tax shieldStep by Step Solution
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