The capm method for the equity component

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Given a before tax cost of debt of 10%, a marginal tax rate of 34%, a security beta of 1.5, a risk free rate of 6%, a market return of 12%, a current dividend on common stock of $2 (just paid), a dividend growth rate of 4%, a current stock price of $20 and a 40% debt weight and 60% equity weight, compute the WACC using the CAPM method for the equity component.

Reference no: EM132010281

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