What is firm weighted average cost of capital

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41) Suppose Anton Inc. just paid a dividend of $3 dollars. It will keep a constant dividend growth rate of 4% for the first 3 years. Afterwards, the company pledges to maintain a constant 8.3 percent growth rate in dividends forever. If the required return on the stock is 12.3 percent, what is the current share price?

42) Bart's Rentals has 58,000 shares of common stock outstanding at a market price of $36 a share. The common stock just paid a $1.08 annual dividend and has a dividend growth rate of 5 percent. There are 12,000 shares of 4 percent preferred stock outstanding at a market price of $60 a share. The preferred stock has a par value of $100. The outstanding bonds mature in 10 years, have a total face value of $750,000, a face value per bond of $1,000, and a market price of $1070 each. The bonds pay 5.5 percent interest, semiannually. The tax rate is 34 percent. What is the firm's weighted average cost of capital?

Reference no: EM131562755

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