What is the annualized cost of debt

Reference no: EM131975526

Question: A firm just paid a $2.50 dividend. Its dividends are expected to grow at a constant rate of 5.50% per year, and the common stock currently sells for $52.50 a share. The firm's 4% coupon bonds are currently selling for $918 with 5 years remaining until maturity.

What is the annualized cost of debt assuming the bonds pay interest semiannually?

What is the cost of equity?

The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC assuming the tax rate is 40%?

Reference no: EM131975526

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