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Business, 28.05.2020 05:01 BreadOfTheBear

9) Marshall Corporation has established a target capital structure of 35 percent debt and 65 percent common equity. The current market price of the firm's stock is P0 = $28; its last dividend was D0 = $2.00, and its expected dividend growth rate is 5 percent constant. The YTM (Yield to Maturity) of Marshall’s outstanding bonds is 10%, and its marginal tax rate is 40%. Marshall can finance its equity portion with retained earnings. Find the weighted average cost of capital (WACC) of Marshall Corporation.

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