Question
Show all work in Excel. 1. Compute the cost of capital. Expected Dividend for next year $4.25 Growth rate of dividends 4% Current stock price
Show all work in Excel.
1. Compute the cost of capital.
| Expected Dividend for next year | $4.25 |
| Growth rate of dividends | 4% |
| Current stock price | $56.25 |
| Bond information | Coupon rate = 8%, maturity = 10 years, maturity value =$1,000 and the current price is 1,082.25. Assume interest is paid semiannually. |
| Debt to equity ratio | 0.25 |
| Flotation cost of debt | 1.75% |
| Flotation cost of equity | 5.5% |
| Tax rate | 22% |
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Intermediate Accounting
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
10th Edition
324300980, 978-0324300987
