Using the following info to find the weighted average cost of capital. FInland corp...
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Finance
Using the following info to find the weighted average cost of capital.
FInland corp can issue bonds at market rate of interest of 10%. The tax rate is for Findland corp is 40%. preferred stock with annual dividends of 10$ can be issued for 100$. Common stock with dividends in year one of 2$ can be issued for 20$. common stock dividends are expected to grow at a 7% rate.
Following is the capital structure for finalnd corp:
Book value Market value
debt 400 300
preferred stock 200 200
common equity 400 1,500
Using market values to determine the weight of each source of financing to determine the weighted average cost of Finland corp.
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