Case study of cyrpton electronics


Cyrpton Electronics has a capital structure consisting of 41% common stock and 59% debt. A debt issue of $1000 par value, 6.4% bonds the mature is 15 years and pay annual interest will sell for $978. Common stock of the firm's currently selling for $30.67 per share and the firm expects to pay a $2.21 dividend next year. Dividends have grown at the rate 5.1% per year and are expected to continue to do so for the foreseeable future. What is Crypton's cost of capital where the firm's tax rate is 30%?

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Accounting Basics: Case study of cyrpton electronics
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