Cameron Company's beta is 1.87.The Treasury bond rate is 2.58 percent.The return to the market is 12.3 percent.The company just paid a dividend of $1.23.The shares sell for $21.00.The dividends are expected to show a growth rate of 6.1%.

1.Calculate the cost of common equity using the DGM.

2.Calculate the cost of common equity using the CAPM.

3.How can the company use the results of questions 1 and 2 in calculating the cost of equity?

4.Calculate the after-tax cost of debt if the bond yield is 6.54% and the tax rate is 21%.

5.The company has a debt equity ratio of .37.What is the percent of debt and percent of equity in the company.

6.Calculate the company's WACC using the results from question 5.

7.Suppose the company wants to use 27 percent equity and73 percent debt.What is the company's new WACC?

8.Why did the company's weighted average cost of capital change in questions 6 and 7?