Company one bond issue has an after-tax yield

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Reference no: EM131544612

You have the following information. Company David's one bond issue has an after-tax yield of 3.73%. Common stock is sold on the market for $78.00/share, D0 = $2.00, constant growth rate of 6%, and flotation costs of $4.00/share. Target capital structure is 40% debt, 60% equity. If the firm's WACC is 6.811%, is all the equity common stock, or all retained earnings?

Reference no: EM131544612

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