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Crypton Electronics has a capital structure consisting of 35% common stock and 65% debt. A debt issue of $ 1,000.00 par value. 6.2% bonds that mature in 15 years and pay annual interest will sell for $972. Common stock of the firm is currently selling for 29.77 per share and the firm expects to pay a $2.35 dividend next year. Dividends have grown at the rate of 5.2% per year 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 tax rate is 30%.

Note: Please explain comprehensively and give step by step solution.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170437

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