A firm pays a $4.80 dividend at the end of year one (D1), has a stock price of $

Question

A firm pays a $4.80 dividend at the end of year one (D1), has a stock price of $80, and a constant growth rate (g) of 5 percent. Compute the required rate of return (Ke). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Rate of return %_____

                                                     What is the rate of return %?

Calculate the aftertax cost of debt under each of the following conditions. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Yield Corporate Aftertax Cost of Tax Rate Debt:

_______%    

Yield Corporate
Tax Rate Aftertax Cost of Debt a. 8.0% 18%        _______%     b. 12.0% 34%        _______%     c. 10.6% 15%       

_______%    

What is the aftertax cost of debt for: A, B, and C?

Explanation / Answer

A firm pays a $4.80 dividend at the end of year one (D1), has a stock price of $

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