R.S. Green has 250,000 shares of common stock
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R.S. Green has 250,000 shares of common stock outstanding at a market price of $28 a share. Next year’s annual dividend is expected to be $1.55 a share. The dividend growth rate is 2 percent. The firm also has 7,500 bonds outstanding with a face value of $1,000 per bond. The yield to maturity that bonds of this category generally earn is 9.5%. The company’s tax rate is 34 percent. What is the firm’s weighted average cost of capital?R.S. Green has 250,000 shares of common stock outstanding at a market price of $28 a share. Next year’s annual dividend is expected to be $1.55 a share. The dividend growth rate is 2 percent. The firm also has 7,500 bonds outstanding with a face value of $1,000 per bond. The yield to maturity that bonds of this category generally earn is 9.5%. The company’s tax rate is 34 percent. What is the firm’s weighted average cost of capital?
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