Calculate thehellip cost of debt cost of equity with the, Financial Management

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Calculate thehellip cost of debt cost of equity with the

MARKET DATA:

U.S. Treasury rate: 3.5%

Stock market total return: 12.1%

Inflation 3.0%

COMPANY DATA:

Dividend growth rate: 4.6%

Outstanding bond YTM: 4.0%

Next year’s expected dividend: $1.50

Tax rate: 40%

Shares outstanding: 100,000

Beta: 1.05 Stock price $19.50

Debt / capital ratio: 25%

Calculate the…

A. Cost of debt

B. Cost of equity with the Capital Asset Pricing Model (CAPM)

C. Cost of equity with the Dividend Growth Model (DGM)DGM

D. WACC with book value

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Financial Management: Calculate thehellip cost of debt cost of equity with the

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Financial Management: Calculate thehellip cost of debt cost of equity with the

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