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Business, 09.09.2019 21:20 antwain2

Gul corp. considers the following capital structure optimal: 40% debt; 50% equity; and 10% preferred stock. gul’s stock currently sells for $50 per share. gul’s beta is 1.8. the risk-free rate is 9 percent and the expected market return is 13 percent. gul’s bond currently sells in the market for $1150. the bond carries an annual coupon payment of 12 % of the face value which is paid in two semiannual payments. the bond will mature in 15 years and its face value is $1000. the bond's annual yield to maturiy is 10.04%. the firm’s marginal tax rate is 40 percent. the gul’s required return on the preferred stock is 13%. find the firm’s overall cost of capital (wacc).

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Gul corp. considers the following capital structure optimal: 40% debt; 50% equity; and 10% prefer...
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