1. Problem 9-5 Cost of Equity: Dividend Growth

Summerdahl Resort's common stock is currently trading at $31.00 a share. The stock is expected to pay a dividend of $1.50 a share at the end of the year (D₁ = $1.50), and the dividend is expected to grow at a constant rate of 5% a year. What is the cost of common equity? Round your answer to two decimal places.

%

2. Problem 9-6 Cost of Equity: CAPM

Booher Book Stores has a beta of 0.6. The yield on a 3-month T-bill is 3% and the yield on a 10-year T-bond is 6.5%. The market risk premium is 4%, and the return on an average stock in the market last year was 10.5%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.

%

3. Problem 9-7 WACC

Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 35%, r_d = 8%, r_ps = 5.7%, and r_s = 11%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.

%

Please, show step by step. Thank you.