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Can you please solve this but with steps and explanation? Also i need to know if the cost of capital is the same of WACC
Can you please solve this but with steps and explanation? Also i need to know if the cost of capital is the same of WACC or it is cost of equity(Re). Thank you
7. The latest annual dividend paid by EPSILON was 4 per share and is expected to both the benefits and dividends grow at a steady rate of 8%. The selling price of the stock today is 50 per share. The unlevered company's beta is 1.5, the return of the market portfolio is 12% and the risk-free rate is 8%. The bonds of this company have an A rating, which means a risk premium of 4%. Calculate the cost of capital of the company using: a) The Gordon model. b) Modigliani and Miller. c) The Capital Asset Pricing ModelStep by Step Solution
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