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The cost of debt is 2%. The firms tax rate is 25 %. The current price for preferred shares in the market is $150 and
- The cost of debt is 2%. The firms tax rate is 25 %.
- The current price for preferred shares in the market is $150 and the perpetual annual dividend is $40.
- Harry Morriss common shares are currently selling at $40 per share, its last dividend (D0) was $6, and dividends are expected to grow at a constant rate of 3 % in the foreseeable future.
- Harry Morriss capital structure is 50 % long-term debt, 25 % preferred stock and 25 % common stock.
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Requirements:
- Why does cost of capital play an important role in decision-making?
- Mention the two ways that companies can raise common equity?
- Determine the Cost of Preferred Stock rp.
- Determine the cost of Common Stock rs.
- Calculate the WACC.
6. When it comes to the return on invested capital and cost of capital, when should a company accept or reject a project
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please make sure the answer is corecct 100%
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