Question
8. Below is a list of details about Company A, whose shares are traded on the stock exchange, and the current market conditions: SH)
8. Below is a list of details about Company A, whose shares are traded on the stock exchange, and the current market conditions: SH) BY MA32 Stock's current market price: TRY 10 Number of share certificates: 250,000 Company's beta coefficient: 1 Treasury bill yield: 5% BIST 100 Index return: 12% Current annual dividend per share: TRY 2 Expected annual dividend increase: 5% Company's total equity on its balance sheet: TRY 2 million Total market value of company's debt: TRY 4 million Company's cost of borrowing: 10% Tax rate: 20% a. Calculate the expected return from the company's stock using the Dividend Model and the Capital Asset Pricing Model (CAPM). b. Calculate the company's weighted average cost of capital.
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