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Suppose Stoney Creek Corporation just isted a dividend of $2.0 per share on its common stock for 2020. The company paid dividendsover the last four years. It paid $1.71 per share in 2016, 51 82 per share in 2017, 51 93 per share in 2018, and 51.99 per share in 2019. the stock currently sells for $45, you are required to use the dividend growth model to calculate to cost of equity capital. What is your best estimate of the company's cost of equity capital using the arithmetic evenge prowth rate individends? What if you use the geometric verace growth rate? The management of the Stoney Creek Corporation provides you with additional information for you to calculate the cost of equity through the CAPM method They indicated that the stock has a bit of 127. The market premium is 55 percent, and are currently vielding 3.7 percent. If the stock sells for 545 per share, calculate the cost of equity ring the CAPM aproach The Stoney Creek Corporation has a target capital structure of 70 percent common stock, percent preferred stock, and 25 percent debt its cost of equity is what you calculated in question lb above through the CAPM method. The cost of preferred stock 5 percent, and the cost of debitis 7 percent. The relevante rotes 35 percent What is the Stoney Creek Corporation's WACC? b. The company president has approached you boot Stoney Crea Corporations capital structure. He wants to know why the company doesn't use more preferred stock financing because it cotes than debt. Calculate the true cost debt to the company and tell the president whether debitor preferred stocks financing is cheaper? Dividend per share Stock price Total number of years Stock Beta Market Risk Premium Treasury Bills Rate $ 2.08 $ 45.00 $ 4.000 1.27 5.50% 3.70% $ - Dividends: 2016 2017 2018 2019 2020 $ 1.71 $ 1.82 $ 1.93 $ 1.99 $ 2.08 70% Weight of Common Stock Weight of Preferred Stock Weight of Debt Cost of Preferred Share Cost of Debt Tax Rate 5% 25%) 5% 7% 35% Output Area: i Calculating Growth Rates 81 82 g3 g(arithmetic) sigeometric) Dividend Growth Model (DGM) Cost of Equity {RE (Arithmetic)} Cost of Equity {RE (geometric)} Capital Asset Pricing Model (CAPM) Cost of Equity Capital (RE) Weighted Average Cost of Capital (WACC) a Weighted Average Cost of Capital (WACC) b After Tax cost of debt Answer the Company President's question about cheaper source of finance