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What is ? bane average cost of capital

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Question 1: Bane Industries has a capital structure consisting of 60 percent common stock and 40 percent debt. The? firm's investment banker has advised the firm that debt issued with a ?$1,000 par? value, 8.3 percent coupon? (interest paid? semiannually), and maturing in 20 years can be sold today in the bond market for ?$1,125. Common stock of the firm is currently selling for ?$79.91 per share. The firm expects to pay a ?$2.09 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: EM132873420

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