9. Problem (2 parts) Pacific Consumer Goods, Inc. wants to caculate the cost of funding their company. Their stock currently trades at $42 per share. They have other information that they think will help them understand the cost of this equity. The most recent dividend was $2.00 per share, and dividends are expected to grow at an annual rate of 5,1% indefinitely What is the cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.... 12.34.) Cost of equity What formula did you use to calculate the cost of equity? (Write the number of the formula from your formula sheet) Formula Number CFFA = OCF-NCS - ANWC 2 OCF = EBIT + D-T OCF = Profit (1-T) + (D)(T) Formula Sheet NSCF = SY-(SV-BV)(T) BV Dstraight-line Years ANPV 6 Sensitivity Variable- A variable Sensitivity_Variable AOCE Avariable 8 NPV = CF (1 + R) 10 IRR-Rate Low CF, (1 + IRR) 0= (NPV Rate rise - Rate (NPVLow - NPV High too 14 Dividend Yield 13 11 Po" RE R (R-a) 17 Pric/share 16 PE Price share Earnings PS- Sales 18 S/S 15 DPR EPS, 19 EPS- Earnings Revenue Cost) shares outstanding Salles shares outstanding EPS D: DPRE Price Benchmark PE ratio x EPS, 21 Price = Benchmark P-S ratio x Sales/Share 22 27 25 PVAD: PMT 26 FVAD PMT PVp=(PMT) 24FVA-MT PV (1+r) PMT + 28 29 Current Yield Anul Coupon Price Po 30 Pond . 1 YTM YTM 31 (1+R) = (1+rX1+h) (terT FV-PV (IT) PV- FV (1+r) in 33 34 35