Cost of capital Exercise 1 The company XYZ expected to distribute $1.44 and the growth rate of dividend is 3%. The pretax cost of debt is 10%, and its marginal tax rate is 40%. Assume that the firm's long-term debt sells at par value. The firm has 500,000 shares of common stock outstanding that sell for $12 per share The total debt is 2,000,000 1- Calculate the capital structure weights. 2- Calculate the WACC using market value weight. Exercise 2 The firm SWIDA distributes the following dividend along the sample period N until N+6. Date Dividend 1.2 1.25 1.25 1.50 1.60 1.35 1.75 N+1 N+2 N+3 1) 2) Calculate the dividend growth rate Calculate the SWIDA market stock price if the risk free rate is 5%, the systematic risk is 1.5 and the mark returns is 12%. The last dividend is $2.00