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You are asked to calculate the weighted average cost of capital of Star Trading Company from the following information: [5] Debt: 12 percent, 10-year, Rs.1,000
You are asked to calculate the weighted average cost of capital of Star Trading Company from the following information: [5] Debt: 12 percent, 10-year, Rs.1,000 par bond can be sold at 950. Common Stock: Expected dividend per share is Rs.12 which is expected to grow at 8 percent per annum. The current price of common stock is Rs.120. Target debt ratio: 40 percent. Assume the marginal tax rate is 30 percent.
You are asked to calculate the weighted average cost of capital of Star Trading Company from the following information: [5] Debt: 12 percent, 10-year, Rs.1,000 par bond can be sold at 950.
Common Stock: Expected dividend per share is Rs.12 which is expected to grow at 8 percent per annum. The current price of common stock is Rs.120.
Target debt ratio: 40 percent.
Assume the marginal tax rate is 30 percent.
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