Business, 07.08.2021 04:50 dondre54

Southern Corporation has a capital structure of 40% debt and 60% common equity. This capital structure is expected not to change. The firm's tax rate is 34%. The firm can issue the following securities to finance capital investments: Debt: Capital can be raised through bank loans at a pretax cost of 8.8%. Also, bonds can be issued at a pretax cost of 6.9%. Common Stock: Retained earnings will be available for investment. In addition, new common stock can be issued at the market price of $89. Flotation costs will be $5 per share. The recent common stock dividend was $4.86. Dividends are expected to grow at 5% in the future.

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Southern Corporation has a capital structure of 40% debt and 60% common equity. This capital structu...