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What is the cost of equity of a company whose shares trading

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Reference no: EM132498877

Question 1: What is the cost of equity of a company whose shares are trading at 30.2 and which pays a dividend of 5 over five years and 6 after five years?

Question 2: What is the cost of debt for a company whose debt at 11% has a nominal value of 1000, is trading at 1037.9 and has a life of five years (redemption at maturity)?

Question 3: Use the answers to questions 1 and 2 and calculate the cost of capital of this company. The company has issued 1000 shares, the corporate tax rate is 34%.

Reference no: EM132498877

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