Ceasar Electronics has a capital structure consisting of 45 percent common stock and 55 percent debt. A debt issue of $1,000 par value, 5.6 percent bonds that mature in 15 years and pay annual interest will sell for $975. Common stock of the firm is currently selling for $29.31 per share and the firm expects to pay a $2.19 dividend next year. Dividends have grown at the rate of 4.6 percent per vear and are expected to continue to do so for the foreseeable future. a. The after-tax cost of debt is %. (Round to two decimal places.) b.the cost of common equity is % c. Crypton's cost of capital is %. (Round to three decimal places.)
Ceasar Electronics has a capital structure consisting of 45 percent common stock and 55 percent debt. A debt issue of $1,000 par value, 5.6 percent bonds that mature in 15 years and pay annual interest will sell for $975. Common stock of the firm is currently selling for $29.31 per share and the firm expects to pay a $2.19 dividend next year. Dividends have grown at the rate of 4.6 percent per vear and are expected to continue to do so for the foreseeable future. a. The after-tax cost of debt is %. (Round to two decimal places.) b.the cost of common equity is % c. Crypton's cost of capital is %. (Round to three decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A 248.
Transcribed Image Text:Ceasar Electronics has a capital structure consisting of 45 percent common stock and 55 percent debt. A debt issue of $1,000 par value, 5.6 percent bonds that mature in 15 years and
pay annual interest will sell for $975. Common stock of the firm is currently selling for $29.31 per share and the firm expects to pay a $2.19 dividend next year. Dividends
have grown at the rate of 4.6 percent per vear and are expected to continue to do so for the foreseeable future.
a. The after-tax cost of debt is %. (Round to two decimal places.)
b.the cost of common equity is %
c. Crypton's cost of capital is %. (Round to three decimal places.)
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