Aaron's Rentals has 58,000 shares of common stock outstanding at a market price of $36 a...

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Aaron's Rentals has 58,000 shares of common stock outstanding ata market price of $36 a share. The common stock just paid a $1.64annual dividend and has a dividend growth rate of 2.8 percent.There are 12,000 shares of 6 percent preferred stock outstanding ata market price of $51 a share. The preferred stock has a par valueof $100. The outstanding bonds mature in 17 years, have a totalface value of $750,000, a face value per bond of $1,000, and amarket price of $1,011 each. The bonds pay 8 percent interest,semiannually. The tax rate is 34 percent. What is the firm'sweighted average cost of capital?

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1cost of common stockexpected dividendmarket pricegrowth rate168536280748expected dividend1641028168592market price362802cost of See Answer

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Aaron's Rentals has 58,000 shares of common stock outstanding ata market price of $36 a share. The common stock just paid a $1.64annual dividend and has a dividend growth rate of 2.8 percent.There are 12,000 shares of 6 percent preferred stock outstanding ata market price of $51 a share. The preferred stock has a par valueof $100. The outstanding bonds mature in 17 years, have a totalface value of $750,000, a face value per bond of $1,000, and amarket price of $1,011 each. The bonds pay 8 percent interest,semiannually. The tax rate is 34 percent. What is the firm'sweighted average cost of capital?