8921826 Finance cost of capital
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Description
he Allied Group intends to expand the company's operation by making significant investments in several opportunities available to the group. Accordingly, the group has identified a need for additional financing in preferred and new common stock and new bond issues. The risk free rate for the company is 7% and the appropriate tax rate is 40%. Also, The beta coefficient for the company is 1.3 and the market risk premium (Km) is 12. New Debt The company has been advised that new bonds can be sold on the market at par (1000) with an annual coupon of 8%, for 30 years.
New Common Stock Market analysis has determined that given the positive history of the firm, new common stock can be sold at 29 per share, with the last dividend being paid of per share. The growth rate...