part A The Drogon Co. just issued a dividend of $2.51 per share on its common...

part A

The Drogon Co. just issued a dividend of $2.51 per share on its common stock. The company is expected to maintain a constant 7 percent growth rate in its dividends indefinitely. If the stock sells for $60 a share, what is the company's cost of equity?

Part B

Lannister Manufacturing has a target debt-equity ratio of 0.65. Its cost of equity is 16 percent, and its cost of debt is 12 percent. If the tax rate is 35 percent, what is the company's WACC?

Part C

Fama's Llamas has a weighted average cost of capital of 12.5 percent. The company's cost of equity is 16 percent, and its pretax cost of debt is 7.5 percent. The tax rate is 34 percent. What is the company's target debt-equity ratio?

Expert Solution

jeff jeffy answered 9 months ago

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