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What is ?bane average cost of capital

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Problem 1: Bane Industries has a capital structure consisting of 63 percent common stock and 37 percent debt. The? firm's investment banker has advised the firm that debt issued with a ?$1,000 par? value, 8.2 percent coupon? (interest paid? semiannually), and maturing in 20 years can be sold today in the bond market for ?$1,076. Common stock of the firm is currently selling for ?$80.81 per share. The firm expects to pay a ?$1.92 dividend next year. Dividends have grown at the rate of 8.3 percent per year and are expected to continue to do so for the foreseeable future. What is ?Bane's average cost of capital where the firm faces a tax rate of 34 ?percent?

Reference no: EM132743277

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