What is the companys cost of equity

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A company has a 9 million shares of common stock outstanding, and 105,000 7.5 semiannual bonds outstanding, par value $ 1,000 each. The bonds have 15 years to maturity and sell for 93 percent of par. The company uses the constant growth model (DCF) to determine the cost of equity. The company's common stock currently trades at $ 40 per share. The year-end dividend is expected to be $ 2 per share, and the dividend is expected to grow forever at a constant rate of 6 percent a year. The company's tax rate is 40 %. a) what is the company's cost of debt? b) what is the company's cost of equity? c) what is the company's wacc?

Reference no: EM13259038

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