Reference no: EM132951386
Growth? Company's current share price is $20.05?, and it is expected to pay a $1.25 dividend per share next year. After? that, the? firm's dividends are expected to grow at a rate of 4.1% per year.
a. What is an estimate of Growth? Company's cost of? equity?
b. Growth Company also has preferred stock outstanding that pays a $1.95 per share fixed dividend. If this stock is currently priced at $28.00?, what is Growth? Company's cost of preferred? stock?
c. Growth Company has existing debt issued three years ago with a coupon rate of 6.4%. The firm just issued new debt at par with a coupon rate of 6.9%. What is Growth? Company's cost of? debt?
d. Growth Company has 5.1 million common shares outstanding and 1.1 million preferred shares? outstanding, and its equity has a total book value of $50.2 million. Its liabilities have a market value of $20.1 million. If Growth? Company's common and preferred shares are priced at $20.05 and $28.00?, ?respectively, what is the market value of Growth? Company's assets?
e. Growth Company faces a 38% tax rate. Given the information in parts a through d and your answers to those? problems, what is Growth? Company's WACC?
?Note: Assume that the firm will always be able to utilize its full interest tax shield.
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