Crypton ELECTRONICS - Essay Prowess


Crypton ELECTRONICS has a capital structure consisting of 43% common stock and 57% debt. A debt issue of $1000 par value, 5.7% bonds that mature in 15 years and pay annual interest will sell for $974. Common stock of the firm is currently selling for $30.06 per share and the firm expects to pay a $2.31 dividend next year. Dividends have grown at the rate of 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 rate is 30%?

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