1. DGM-Dividend growth model Po = OR r-) Po 2. CAPM - Capital Asset Pricing Model CAPM = 1; + BC- 3. Risk premium approach rt = coupon rate on new debt + (expected return on mkt - YTM on high rated corporate bonds) = TE Find the cost of internal equity: if the value of the common stock today is 575, the stock just paid $3.60 this year. The growth of the dividend is expected to be 5% for the foreseeable future. The current risk free rate is 2.5%, the systematic (Beta) is 0.95, expected return on the market is 11%, and yield to maturity of high rated bonds is 7% P E D WACC = D+P+ tot Ero (1 7) + D +PEPP + D +P ETE TD - + Calculate WACC