Crypton Electronics has a capital structure consisting of 41% common stock and 59% debt. A debt issue of $1,000 par…
Crypton Electronics has a capital structure consisting of 41% common stock and 59% debt. A debt issue of $1,000 par value, 6.1% bonds that mature in 15 years and pay annual interest will sell for $974. Common stock of the firm is currently selling for $30.25 per share and the firm expects to pay a $2.25 dividend next year. Dividends have grown at the rate of 4.8% per year and are expected to continue to do so for the foreseeable future. What is Crypton’s cost of capital where the firm’s tax rate is 30%?
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