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The capital structure of Pendekant Products is 58 percent common stock, 2 percent preferred stock, and 40 percent debt. The firm maintains a dividend payout
The capital structure of Pendekant Products is 58 percent common stock, 2 percent preferred stock, and 40 percent debt. The firm maintains a dividend payout ratio of 24 percent, has a beta of 108, and has an income tax rate of 21 percent. Given this information, which one of the following statements is accurate? Multiple Choice The weighted average cost of capital will remain constant as long as the company's capital structure remains constant The cost of equity can be estimated only by using the capital asset pricing model The cost of equity is unaffected by a change in the company's tax rate The aftertax cost of debt will be greater than the current yield to maturity on the company's outstanding bonds
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