Question
You will want to use the SAME information and your solutions here in the next question (use the values you calculated here): The bonds your
You will want to use the SAME information and your solutions here in the next question (use the values you calculated here):
The bonds your company just issued carry a yield to maturity of 9%, and you have preferred stock outstanding which pays a 7% dividend yield. Your company has a tax rate of 21%.
Your company is capitalized with Equal Parts of Common Stock, Preferred Stock, and Debt. Your stock, which just yesterday (isn't that convenient...) paid a dividend of $2.00 per share, currently trades at $22 per share. The dividend is expected to grow at 4% per year, indefinitely.
Q: What rate of return do investors apparently require on your firm's stock?
Enter your answer as percentage, not as a decimal. For example, ten percent would be entered as "10" or as "10.000" and NOT as "10%" nor as "0.10".
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