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Question 6 Using the following information on Growth Company's sources of capital, calculate the company's Weighted Average Cost of Capital (WACC). The company tax rate is 30%. The company has 5 million ordinary shares outstanding. The share price currently is $20 and it is expected to pay a $1 dividend per share next year After that, the firm's dividends are expected to grow at a rate of 4% per year The company also has 1 million preference shares outstanding that pay a $2 fixed dividend. The share price currently is $28. The company has existing debentures issued three years ago with a coupon rate of 6%. The current market yield on the debentures is 8% and the market value of the debentures is $20 million 10 Marks]
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