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Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow at 8% per year for the foreseeable future. The
Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow at 8% per year for the foreseeable future. The current stock price is $54. A $15 million bank line of credit is available with an interest rate of 9%. The firm's tax rate is 34%. What is the firms cost of capital if their capital structure consists of 60% equity and 40% bank loans?
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