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Q21. (10) Assume Company W: estimates that it can issue debt at a pretax rate of rd=8% and its tax rate is 25%; can bsue
Q21. (10) Assume Company W: estimates that it can issue debt at a pretax rate of rd=8% and its tax rate is 25%; can bsue preferred stock which pays a constant dividend of $3.00 per share at 365 per preferred thare its common stoct currently selts for $28 per share with an annual dividend of $2.50 per share and dividend growth will be constant at 5% per annum. The capital structure of the company is 40% debt, 10% prelerred stock and 50 \% common stock. Determine the after tax cost of debt, cost of preferred stock, and cost of common stock (retained eamingu) for the company. Show all work processes for Question 19 in the space inmediatlev below. (Question 22 - Show Work orocesses for Question 21. 4. Dedt - 024; Preferred - oed, Common - 05 c. Debt - 22; Preferred = 30, Cormion - 07 d. Correct arswer not provided
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