Firm presents value capital structure described

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Market value will be 60 millions. During the year company will raise and invest 20 million in new projects. The firm presents value capital structure described below. No short -term debt. Debt: 30,000,000 Common equity: 30,000,000 and Total equity: 60,000,000. New bonds have 10% coupon rate, and they will be sold par. Common stock currently selling at $30 a share. Stockholders required rate of return is 12%, consider dividend yield of 4% and expected growth of 8%. ( the next expected dividend is 1.20, so $1.20/$30=4%). The marginal corporate tax rate is 35%.

Reference no: EM13731016

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