Determined that its optimal capital structure consists

Assignment Help Financial Management

Reference no: EM131536999

A company has determined that its optimal capital structure consists of 40 percent debt and 60 percent equity. Given the following information, calculate the firm's weighted average cost of capital. Cost of Debt = 6.7%, Tax rate = 40%, Current Stock Price = $23.41, Long Run Growth rate = 6.5%, Next Year's Dividend = $2.78. Show your answer to the nearest .1%. Do not use the % sign in your answer. Enter your answer as a whole number, thus 9.2% would be 9.2 rather than .092 or 9.2%.

Reference no: EM131536999

Questions Cloud

Paid for stock that will pay dividend : Which is the amount that should be paid for a stock that will pay a dividend of $3.23 in one year and $3.57 in two years?

Mills mining is considering an expansion project : Mills Mining is considering an expansion project. The proposed project has the following features.

What are the operating cash flows in year two : Pantaloon Beer is considering opening a microbrewery near campus. What are the Operating Cash Flows in Year 2?

European put option on a non-dividend-paying stock : Consider a 3-month European put option on a non-dividend-paying stock,

Determined that its optimal capital structure consists : A company has determined that its optimal capital structure consists of 40 percent debt and 60 percent equity.

Stock is expected to pay constant dividend in perpetuity : Assume the stock is expected to pay a constant dividend in perpetuity.

Differentiate between pure and speculative risk : Define the term “persons insured” under the homeowner’s program. Differentiate between Pure and speculative risk?

Evaluate average-risk projects : Virus Stopper Inc., a supplier of computer safeguard systems, uses a cost of capital of 9 percent to evaluate average-risk projects,

What is the price volatility of this bond : Follow Bank has a $1 million position in a five-year, zero-coupon bond with a face value of $1, 402, 552. What is the price volatility of this bond?

User Account

All Pages