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The Ivanhoe Products Co . currently has debt with a market value of $ 2 5 0 million outstanding. The debt consists of 9 percent

The Ivanhoe Products Co. currently has debt with a market value of $250 million outstanding. The debt consists of 9 percent coupon
bonds (semiannual coupon payments) that have a maturity of 15 years and are currently priced at $1,423.92 per bond. The firm also
has an issue of 2 million preferred shares outstanding with a market price of $14.00 per share. The preferred shares pay an annual
dividend of $1.20. Ivanhoe also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is
expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 6 percent per year
forever. If Ivanhoe is subject to a 28 percent marginal tax rate.
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