Question 1 a) IIC Plantation faces increasing needs for capital

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Question 1

a) IIC Plantation faces increasing needs for capital. Fortunately it has an AA credit rating, which allowing the company an easy access to the capital. The firm's financial manager is trying to determine the firm's current (2019) weighted average cost of capital in order to assess the profitability of capital budgeting projects.

The company's common stock has a price of $98.44 and a current dividend of $3.15 per share. The par value of the common stock is $88. The historical growth pattern for dividends is as follows:

Last year $2.81

Last 2 years $2.51

Last 3 years $2.24

Last 4 years $2.00