Nine Point Industries has a capital structure of 40% debt and 60% common equity. This capital structure is expected not to change. The firm's tax rate is 34%. The firm can issue the following...


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Nine Point Industries has a capital structure of 40% debt and 60% common equity. This capital<br>structure is expected not to change. The firm's tax rate is 34%. The firm can issue the following<br>securities to finance capital investments:<br>Debt: Capital can be raised through bank loans at a pretax cost of 6.6%. Also, bonds can be<br>issued at a pretax cost of 11.3%.<br>Common Stock: Retained earnings will be available for investment. In addition, new common<br>stock can be issued at the market price of $94. Flotation costs will be $4 per share. The recent<br>common stock dividend was $4.48. Dividends are expected to grow at 7% in the future.<br>What is the cost of capital if the firm uses bonds and issues new common stock?<br>SET YOUR CALCULATOR TO 4 DECIMAL PLACES. PLEASE INPUT THE ANSWER IN PERCENT<br>ROUNDING IT TO 2 DECIMALS. DO NOT INCLUDE % SIGN, E.G., INSTEAD OF 9.9911%<br>INPUT 9.99<br>

Extracted text: Nine Point Industries has a capital structure of 40% debt and 60% common equity. This capital structure is expected not to change. The firm's tax rate is 34%. The firm can issue the following securities to finance capital investments: Debt: Capital can be raised through bank loans at a pretax cost of 6.6%. Also, bonds can be issued at a pretax cost of 11.3%. Common Stock: Retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $94. Flotation costs will be $4 per share. The recent common stock dividend was $4.48. Dividends are expected to grow at 7% in the future. What is the cost of capital if the firm uses bonds and issues new common stock? SET YOUR CALCULATOR TO 4 DECIMAL PLACES. PLEASE INPUT THE ANSWER IN PERCENT ROUNDING IT TO 2 DECIMALS. DO NOT INCLUDE % SIGN, E.G., INSTEAD OF 9.9911% INPUT 9.99

Jun 04, 2022
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