Weighted Average Cost of Capital
Question # 00010745
Posted By:
Updated on: 03/23/2014 02:29 PM Due on: 03/23/2014
Crypton Electronics has a capital structure consisting of 44% common
stock and 55% debt. A debt issue of 1000 par value, 5.8% bonds that mature in
15 years and pay annual interest will sell for $977. Common stock of the firm
is currently selling for $29.05 per share and the firm expects to pay a $ 2.24
dividend next year. Dividends have grown at the rate of 5.3% per year and are
expected to continue to do so for the foreseeable future. What is Crypton's
cost of capital where the firm's tax rate is 30%?
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Rating:
/5
Solution: Weighted Average Cost of Capital