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QUESTION 3 Medicine Hat Co. expects to earn $3.50 per share during the current year, its expected payout ratio is 50%, its expected constant dividend
QUESTION 3 Medicine Hat Co. expects to earn $3.50 per share during the current year, its expected payout ratio is 50%, its expected constant dividend growth rate is 4.00%, and its common stock currently sells for $31.00 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock? O 10.18% O 5.58% O 10.73% O 14.73% QUESTION 4 You were hired as a consultant to Okotoks Company, whose target capital structure is 38% debt, 10% preferred, and 52% common equity. The after-tax cost of debt is 3.80%, the cost of preferred is 7.60%, and the cost of retained earnings is 11.00%. The firm will not be issuing any new stock. What is its WACC? O 7.92% o 22.40% O 7.47% O 6.22%
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