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Problem:

To finance the purchase, GBH will sell 20-year bonds with a $1000 par value paying 7.9 percent per year (paid semiannually) at the market price of $928. Preferred stock paying a $2.55 dividend can be sold for $34.76. Common stock for GBH is currently selling for $49.62 per share. The firm paid a $3.94 dividend last year and expects dividends to continue at a rate of 3.8 percent per year into the indefinite future. The firm's marginal tax rate is 34 percent. What discount rate should you use to evaluate the warehouse project?

Task:

Question: Calculate component weights of capital. The weight of debt in the firm's capital structure is ___%. Explain in detail and also provide step by step solution.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146366

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