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Problem:

Crypton Electronics has a capital structure consisting of 43% common stock and 57% debt. A debt issue of $1000 par value, 5.7% bonds that mature in 15 years and pay annual interest will sell for $974. Common stock of the firm is currently selling for $30.06 per share and the firm expects to pay a $2.31 dividend next year. Dividends have grown at the rate of 5.1% per yeat and are expected to continue to do so for the foreseeable future.

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Question: What is Crypton's cost of capital where the firm's rate is 30%?

Note: Be sure to show how you arrived at your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167986

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