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Rob wants to start his own restaurant company. He wants to finance the company using debt, preferred stocks, and common stocks. He has decided to
Rob wants to start his own restaurant company. He wants to finance the company using debt, preferred stocks, and common stocks. He has decided to set up his capital structure with 40% debt, 5% preferred stocks, and 55% common stocks. Market statistics: the risk-free rate is 2% and the market rate is 8%.
- Rob also wants to issue common stocks with a beta of 4. His projected dividend is $0.87, and the growth rate of his company is projected at 15%. At what price should he sell his stocks?
Rs (required rate of return) =
Common stock price =
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