Company A Company B Company C Company D

Latest Financial Statement Extracts:

Shareholders' funds(mNOK) 90.4 65.4 5,9 33,3

Long term bonds (mNOK) 2.8 5,8 1,1

Dividend Per Share (in NOK) 0.43 0,82 0,24 0,99

Annual Dividend growth since 2014: 12% 10% 19% 22%

Current stock market details:

Equity market value (mNOK) 68,0 63,2 68,8 123,4

Market value of long-term loans (mNOK) 0,6 0,1 0,3

Equity beta value 0,75 0,88 1,24 1,26

Share price (NOK) 16,4 28,0 30,3 47,0

Assume that the return on government bonds is 11% and that the return on all long-term corporate loans is 12%. The market premium for risk should be assumed to be 9%.

a)Calculate the equity cost of capital, using both the dividend model and the CAPM.

b)Calculate the WACC for each of the four companies, assuming a corporation tax rate of 30%

c)Using both the information given in the question, and the results of your calculations in part(a), explain why the WACC's differ between the four companies.