Determining cost of capital from firm tax rate


Cryton Electronics has a capaital structure consisting of 40% common stock and 60% debt. A debt issue of $1000 par value, 5.8% bonds that mature in 15 years and pay annual interest will sell for $979. Common stock of the firm is currently selling for $29.44 per share and the firm expects tp pay a $2.34 dividend next year. Dividends have grown at a rate of 4.9% per year and are expected to continue to do so for the forseeable future. What is Crypton's cost of capital where the firm's tax rate is 30%.

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Finance Basics: Determining cost of capital from firm tax rate
Reference No:- TGS040921

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