The risk-free rate is 3 and the expected return on the, Ask an Expert

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Chico Company has the following capital structure: 5 million shares of stock, selling at $25 each, with b = .9; zero-coupon bonds with face amount $60 million, maturing in 10 years, with yield to maturity 7%; and 1 million shares of preferred stock selling at $12 per share, paying a dividend of 30¢ per quarter. The income tax rate of Chico is 32%. The risk-free rate is 3%, and the expected return on the market 13%. Do not use the original issue discount. Find the weighted average cost of capital for Chico.

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Category:- Basic Finance
Reference No.:- M950538

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