Recent financial information relating to Close Co, a stock market listed company, is as follows.

Financial analysts have forecast that the dividends of Close Co will grow in the future at a rate of 4% per year. This is slightly less than the forecast growth rate of the profit after tax (earnings) of the company, which is 5% per year. The finance director of Close Co thinks that, considering the risk associated with expected earnings growth, an earnings yield of 11% per year can be used for valuation purposes.

Close Co has a cost of equity of 10% per year and a beforetax cost of debt of 7% per year. The 8% bonds will be redeemed at nominal value in six years time. Close Co pays tax at an annual rate of 30% per year and the exdividend share price of the company is $8.50 per share.

Statement of financial position information