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# How do you do part d? a)GHI Company's current share price is \$17.65...

How do you do part d?

a)GHI Company's current share price is \$17.65 and it is expected to pay a \$0.7 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 5.8% per year.

What is an estimate of GHI Company's cost of equity? - solved: 9.77%

b)GHI Company also has preferred stock outstanding that pays a \$1.9 per share fixed dividend. If this stock is currently priced at \$30.65 per share, what is GHI Company's cost of preferred stock? - solved: 6.2%

c)GHI Company has existing debt issued three years ago with a coupon rate of 6%. The firm just issued new debt at par with a coupon rate of 6%. What is GHI Company's pre-tax cost of debt? - solved: 6%

d)GHI Company has 5 million common shares outstanding and 3 million preferred shares outstanding, and its equity has a total book value of \$40 million. Its debt has a market value of \$15 million. If GHI Company's common and preferred shares are priced at \$17.65 and \$30.65, respectively, what is the market value of GHI Company's assets (in millions)

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