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Below is balance sheet of Albion Company Debt(9% interest rate) $30,000,000 preferred stock(100,000 shares,12% dividend) $10,000,000 common stock(5,000,000 outstanding) $60,000,000 Albion's Debt's current market price is $1,083.34,yield to maturity is 8%.Market price of preferred stock is $125 per share, common stock $16 per share.The accountant estimates the company's cost of common equity is 17%. If the company has the effective tax rate of 40%,what is the company's cost of capital? A. 12.60% B. 13% C. 13.90% D. 14.10% |
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