### Determine the firm''s cost of capital

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Given the following information

interest rate                        8%

tax rate                              30%

dividend                                \$1

price of common stock           \$50

growth rate of dividends            7%

debt ratio                                 40%

Determine the firm's cost of capital

Using the corporate tax rates provided in the text, what is the corporate income tax paid on earnings of

A.   \$1,000                   B. \$10,000                 C. \$100,000      D  \$1,000,000           E.  \$10,000,000

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