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Determine what is the company growth rate

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Problem 1: Gateway Inc. has a weighted average cost of capital of 11.5 percent. Its target capital structure is 55 percent equity and 45 percent debt. The company has sufficient retained earnings to fund the equity portion of its capital budget. The before-tax cost of debt is 9 percent, and the company's tax rate is 30 percent. If the expected dividend next period is P5 and the current share price is P45, what is the company's growth rate?

Reference no: EM132759363

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