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Sorensen Systems Ine. is expected to pay a $2.50 dividend at year end (D1=$2.50), the...

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Accounting

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Sorensen Systems Ine. is expected to pay a $2.50 dividend at year end (D1=$2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $87.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 25%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from retained earnings? Do not round your intermediate calculations. 6,62% 7.13% 5.10% 5.699% 7.35%

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