Business, 14.04.2020 18:09 rodrickahammonds

Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at year end (D1 = $2.50), and the dividend is expected to grow at a constant rate of 5.40% a year. The before-tax cost of debt is 7.50%, and the tax rate is 25%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from reinvested earnings? (Hint: use the constant growth model to find the cost of equity rs first.)

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Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at yea...

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