Cost of debt is always more than the cost of equity

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Reference no: EM132015130

1. ABC expects to pay a dividend one year from now of $1.45. The dividend exhibits constant growth of 6.4%, and the required rate of return on the stock is 14.1%. Given all of this, what price would you expect to pay for the stock? (Show your answer to the nearest penny)

2. True or false: Because the cost of debt is always more than the cost of equity, most companies try to apply financial leverage as much as possible.

Reference no: EM132015130

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