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The preferred stock is selling at $88 per share and pays a dividend of $8.40 per share. The corporate tax rate is 30 percent. The
The preferred stock is selling at $88 per share and pays a dividend of $8.40 per share. The corporate tax rate is 30 percent. The flotation cost is 2.0 percent of the selling price for preferred stock. The optimum capital structure for the firm is 25 percent debt, 15 percent preferred stock, and 60 percent common equity in the form of retained earnings. a. Compute the average historical growth rate. Note: Do not round Intermedlate calculatlons. Round your answer to the nearest whole percent and use thls value as g. Input your answer as a whole percent. b. Compute the cost of capltal for the Individual components in the capltal structure. Note: Use the rounded whole percent computed In part a for g. Do not round any other Intermedlate calculations. Input your answers as a percent rounded to 2 decimal places. c. Calculate the welghted cost of each source of capltal and the welghted average cost of capltal. Note: Do not round Intermedlate calculatlons. Input your answers as a percent rounded to 2 decimal places
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