7. Johnson Farms before-tax cost of debt is 7% and its marginal tax rate is...
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7. Johnson Farms before-tax cost of debt is 7% and its marginal tax rate is 32%. The current stock price is $70/share. The expected dividend is $3/share. The dividend is expected to grow at a constant rate of 8%. What will be the firms cost of common equity and its WACC when the firms target capital structure is 40% debt and 60% common equity?
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