Blue bayou inc is expected to pay a 250 dividend at year, Ask an Expert

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Blue Bayou Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.5% a year, and the common stock currently sells for $52.50 a share. The before-tax cost of debt is 7.5%, and the tax rate is 40%. The target capital structure consists of 45% debt and 55% common equity. Calculate the company's after-tax cost of debt to be used in determining the WACC. Calculate the company's cost of retained earnings to be used in determining the WACC. Check figure: rs = 10.26%.Calculate the company's WACC if all the equity used is from retained earnings

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91783024

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