Cost of Capital ...
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Finance
| Cost of Capital | |||||||
| Healthcare Finance - HCM617 | |||||||
| Clarkson University | |||||||
| Abeline Medical Center has established a target capital structure of 35% debt. Abeline currently has outstanding a 6% annual coupon bond with a $1,000 par value that is selling today for $1,199 and that has 23 years to maturity. Abeline has outstanding common stock which paid a $2.00 dividend today, that sells for $30 and for which analysts predict a constant growth rate of 2.5% for dividends. Abeline has a marginal federal and state income tax rate of 25%. | |||||||
| What is Abilene's Corporate Cost of Capital? (10 points) | |||||||
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