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XYZ has a target capital structure of 20 percent common equity and the rest long term debt. The company's oustanding bonds have a yield to maturity of 7.5%. The company's common stock sells for $62.51 per share and are expected to pay a dividend of $1.87 this year. Those dividens are expected to continue to grow at a constant rate of 12.8 percent. Given its tax rate of 40 percent, what is XYZ's weighted average cost of capital?

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Financial Management, Finance

Category:- Financial Management
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