Crypton Electronics

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Crypton Electronics has a capital structure consisting of 36% common stock and 64% debt. A debt issue of $1,000 par value, 5.6% bonds that mature in 15 years and play annual interest will sell for $970. Common stock of the firm is currently selling for $29.56 per share and the firm expects to pay a $2.18 dividend next year. Dividends grown at the rate of 5.5% 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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