Answer to Question #27643 in Economics of Enterprise for brandon
assume that you are on the financial staff of davis, inc. and you have collected the following data: the yield on the company's outstanding bonds is 7.75%, its tax rate is 40%, the next expected dividend is $0.65 a share, the dividend is expected to grow at a constant rate of 6.00% s year, the price of the stock is $15.00 per share, the flotation cost for selling new shares is f= 10% and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?
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