Problem:
Crypton Electronics has a capital structure consisting of 39% common stock and 61% debt. A debt issue of $1,000 par value, 5.7% bonds that mature in 15 years and play annual interest will sell for $979. Common stock of the firm is currently selling for $30.35 per share and the firm expects to pay a $2.19 dividend next year. Dividends grown at the rate of 5.3% per year and are expected to continue to do so for the foreseeable future.
Required:
Question: What is Crypton's cost of capital where the firm's tax rate is 30%?
Note: Explain all steps comprehensively.