What is the firms cost of capital

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Reference no: EM13769184

Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow at 8% per year for the foreseeable future. The current stock price is $54.

A $15 million bank line of credit is available with an interest rate of 9 percent. The firm's tax rate is 34%.

What is the firm’s cost of capital if their capital structure consists of 60% equity and 40% bank loans?

11.98%

15.20%

13.21%

14.60%

12.58%

Reference no: EM13769184

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