Golden State Home Health Inc is a large California based for profit home health agency. Its dividends are expected to grow at a constant rate of 5% per year into the foreseeable future. The firms last dividend (Do) was $1 and its current stock return price is $10. The firm’s beta coefficient is 1.2; the rate of return on 20 year T-bonds currently is 8%. And the expected rate of return on the market, as reported by a large financial services firm is 14%. Golden State target capital structure calls for 60% debt financing; the interest rate is 30%. A.