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The corporate tax rate is at 40%. The information on debt, preferred stock and common...

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Finance

The corporate tax rate is at 40%. The information on debt, preferred stock and common stock for AbbyToy Ltd. are as follows. Debt: The company can issue bonds at a yield to maturity of 5%. Preferred Stock: The company can sell 5.6% preferred stock at its $100 per share par-value. Flotation costs are $4 per share. Common Stock: Price per share is currently $65. Dividends are projected at $3 per share next year with a dividend growth rate of 2%. Calculate the cost of common stock.

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